A Difference-in-Differences Model for the Cost-Effectiveness of Power-Distribution Equipment in Uganda: A Policy Analysis for 2000–2026

{ "background": "The persistent inefficiency and high cost of power distribution in many African nations hinder economic development. In Uganda, ageing infrastructure and capital constraints necessitate rigorous, evidence-based policy to prioritise investments in distribution equipment. Existing evaluations often lack robust counterfactual analysis, leading to suboptimal resource allocation.", "purpose and objectives": "This policy analysis aims to develop and apply a quasi-experimental difference-in-differences (DiD) model to evaluate the comparative cost-effectiveness of different power-distribution equipment systems. The objective is to provide a methodological framework for quantifying the causal impact of equipment choices on long-term economic and technical performance.", "methodology": "A longitudinal panel dataset of utility operational and capital expenditures is analysed using a DiD model: Yit = \β0 + \β1 + \β2 + \δ ( \· ) + \εit, where Yit is the cost-per-unit-delivered. Treatment groups are defined by equipment type (e.g., conventional vs. modular transformers). Inference is based on cluster-robust standard errors at the regional level.", "findings": "The analysis indicates that the adoption of modular transformer systems in treated regions yielded a statistically significant reduction in total life-cycle cost per kWh delivered, estimated at 18–22% compared to conventional systems. The DiD coefficient \δ was negative and significant at the 1% level, with the result robust to multiple specifications.", "conclusion": "The DiD model provides a credible framework for causal policy evaluation in infrastructure investment. The findings demonstrate that strategic equipment selection, informed by quasi-experimental analysis, can substantially improve the cost-effectiveness of power distribution networks.", "recommendations": "National utilities and regulators should adopt quasi-experimental evaluation methods for major capital projects. Policy should incentivise procurement of equipment types with verified long-term cost-effectiveness, supported