The Rural Electrification Fund (REF)

The REF promotes the equitable distribujtion of rural electrification in Uganda through the increased provision of access to electricity for economic, social and household use.

The REF Provides grants for:

  • (i) Rural electrification programmes and activities

  • (ii) Lowering the financial threshold for the private sector and local communities for investments in rural electrification projects through a smart subsidy.

  • Sources of funding for the REF

  • Money appropriated by Parliament;

  • Any surplus moneys made from the operations of the Electricity Regulatory Authority declared to the Minister of Finance and paid into the fund

  • A levy of 5% on transmission stations; and

  • Donations, gifts, grants and loans acceptable to the Ministers of Energy and Finance. At the moment there is financing from World Bank, SIDA, JICA and NORAD

  • The fund is used to subsidise technological approaches in rural electrification that include:

  • expansion of the main grid;
  • development of isolated and mini-grid systems for relatively concertrated areas with a potential for productive use;
  • renewable energy power generation for sale to the main grid and for mini-grids; and
  • installation of solar photovoltaic systems for isolated settlements that cannot be economically connected to the grid.

  • Categories of Projects funded under the REF
  • Private Sector Initiated Projects
  • Local Communities Initiated Projects
  • Priority Rural Electrification Projects
  • Process for sector initiated rural electrification projects

  • Expression of interest to REA on concept, development and site


  • Obtain a permit from Electricity Regulatory Authority (ERA) to undertake studies.
  • Carry out feasibility studies with an option of applying for a grant from Electricity for Rural Transformation BUDS/PSF Project
  • Submit formal application including studies and business plan to REA indicating subsidy requirements.
  • If proposal is feasible, negotiate and sign a Subsidy Agreement and obtain a leter of comfort from REA.
  • Reach financial closure with banks and other relevant institutions.
  • Obtain an operating license from ERA
  • Implementation
  • Monitoring and evaluation carried out by REA

  • Process for Local Communities Initiated rural electrification projects
  • Community mobilizes itself and sends an expression of interest to REA
  • Community expresses a willingness to cost share with REA (30/70) and endorses consent in writing.
  • Community will to contribute right of way towards rural electrification project and endorses right of way in writing.
  • Community is represented by a legal entity (e.g LCIII, Cooperative)
  • REA appraises schemes for economic viability
  • REA mobilizes for surveys and costing of works.
  • Community makes its contribution to REA's Account.
  • REA mobilises for construction of schemes

  • Process for Priority Rural Electrification Projects
  • REA identifies Priority Rural Electrification Projects (PREPs) and packages them for tender.
  • REA requests for expressions of interest in developing PREPs and prequalificaties bidders.
  • Prequalified firms receive tender documents from REA.
  • Tenders are evaluated and requirements for subsidies determined.
  • Negotiate with winning tenders and initiate subsidy agreement pending fulfilment of conditions for effectiveness.
  • Issue of license by ERA
  • Reach financial closure.
  • Environmental certification by NEMA