operate at any one time and the network infrastructure was dilapidated and in desperate need of refurbishment. Government and donors began ploughing money into infrastructure rehabilitation and extension in order to resuscitate the sector, but UEB - plagued by internal inefficiencies and financial difficulties - undermined such efforts by being resistant to change and slow to implement interventions targeted at improving performance. The system was operating inefficiently, quality of supply was low, technical and commercial losses high, power outages frequent and customer service nearly nonexistent.

The poor performance of UEB represented an important constraint on the economy, and gradually eroded the legitimacy of the vertically integrated state-owned model. A 1996 World Bank ESMAP report revealed the depth of the problem, noting that while many of the difficulties facing the sector “can be traced to Uganda’s years of civil war and disruption, the fact that sector performance remains so weak after many years of physical recovery and much technical support make a clear case for significant institutional change”. Given the financial dependence of Uganda on aid at this time – around 50 percent of the government budget in 1995 was financed through aid – external actors also played a determining role. At every stage of reforms, institutions such as the World Bank, the IMF, DFID, NORAD, and other multilateral and bilateral agencies have provided advisory, financial and technical support. Nonetheless, as noted above, the government did not just accept reforms, it embraced them. By the time the government officially set its sights on reforming UEB, there was already an emergent base of support in the public and across government, backed by the international development community. Nevertheless, there were also significant pockets of opposition particularly among those within state-owned enterprises (SOEs) and some ministries that stood to lose from such reforms. The president himself engaged extensively with these stakeholders in an attempt to build further support, providing enough of a basis for reforms to begin.

# **_2.3 1998-2001: UEB undergoes thorough preparation for unbundling_**

As had been the case with macro-economic reforms at the beginning of the decade, the government once again turned to advancing robust legislation and policy to cement the path of reforms, having established a workable consensus through stakeholder engagement. Under the personal direction of the president and with support from the World Bank and broader donor community, Uganda initiated a comprehensive power sector reform program in 1998, commissioning London Economics to produce the Ugandan Power Sector Restructuring and Privatisation: New Strategy Plan and Implementation Plan, published in June 1999. The 1999 Electricity Act followed in December of the same year, providing the means for implementing decisions taken. The Act also provided for an interesting shift in jurisdiction, whereby the UEB and its successor companies would be incorporated under the Companies Act – meaning that they would fall under the jurisdiction of MoFPED. This was of course in accordance with the earlier PERD Statute (1993), revealing the influence of MoFPED in power sector reforms. The reform process was supported by external donors, including the Norwegian Water Resources and Energy Directorate, which played an important role in drafting the new energy act, including the establishment of the independent Electricity Regulatory Authority (ERA) and the development of the regulatory framework therein.

In addition to targeted stakeholder engagement and the subsequent enactment of the 1999 Electricity Act, developments within the UEB also played a key role in the success of reforms leading up to and following the enactment of the legislation. One of the contributing factors to the poor state of the 9