power sector had been political interference, particularly with regard to tariff-setting, investment decisions, and personnel deployment. Lacking management and financial autonomy, the UEB failed to undertake many of the most basic, modern utility management practices. There seemed to be scant formal basis for tariff-setting, little systematic reporting on sector performance, and prevalent defaulting on electricity bills by government and high-level politicians. A number of interventions to address these areas were initiated in the early- to mid-1990s. However, UEB management was slow to take action and continued to operate as usual. The government battled to bring about real change in UEB’s management culture or practice. This led to the removal of a number of senior managers – including two successive managing directors (MDs) over the period 1996 to 1998. In the first case, this was on grounds of failing to implement changes in line with the government’s divestiture programs, while in the second it was in association with gross financial irregularities.

Following these incidents, in 1998, an expatriate hailing from the South African Utility Eskom was recruited to the position of MD and tasked with implementing internal reforms. These included restructuring the organization into separate units, each with a designated general manager (Generation, Transmission, Distribution, Projects, Finance, and Services), staff rationalization, divestiture of non-core activities, cost control measures, the introduction of a new billing system, and improvement in customer services. Under this new leadership, staff were communicated with consistently through circulars and engaged in dialogue and seminars on reforms (including the sensitive issue of staff ‘right-sizing’). The MD gave clear messages regarding the need for a utility ‘turn around’, emphasizing that reform was a policy decision already taken by government and that his remit was to prepare the utility for unbundling and privatization. Though staff and their unions were concerned about reforms, this communication and the provision of generous severance packages (provided by MoFPED, through the Privatisation Unit or PU) for voluntary retirement allayed fears somewhat. ‘Right-sizing’ was also not just about cutting staff numbers, it had an explicit focus on retaining and developing skills, with staff benefiting from training and skills development (with support from other countries, including study tours) over this period.

By the time unbundling was due to take place, the utility had been internally restructured, a new billing system had been put into place with support from the UK’s Department for International Development (DFID), and the technical capacity of the streamlined staff had been advanced with support from multiple donor agencies. When UEB was unbundled in 2001, most of UEB’s staff were offered positions in one of the new companies - UEGCL, UETCL, and UEDCL. Asset division was managed by the Privatization Unit, which worked well according to a Lahmeyer asset evaluation study. In this period, the World Bank debt relief program had also allowed Uganda to restructure its debt portfolio, which meant that tariffs were increased by 100 percent, instead of the 200 percent that would have otherwise been required.

However, the situation was still dire. At the time of unbundling, UEB’s successor companies were close to insolvency (by normal standards) and, while a number of interventions had been made to improve collections, reduce theft, and improve performance, implementation was slow going. At the time, the major cause of the poor state of the sector was identified as UEB’s lack of managerial and financial autonomy from the government which had hindered the development of a commercial business culture, accountability, and modern utility management practices. Under continuing conditions of supply crisis, battling with theft and non-payment (including from the government), and struggling with poor technical performance, Uganda embarked on the next phase of reforms, which would further remove the operational management of the power sector from direct political influence.

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