Agga Ssekalaala Junior (left), the board chairperson of Uganda Manufacturer Association (UMA) shares a moment with Okaasai Opolot, the state minister for Energy, during the 2nd Pre- budget breakfast dialogue UMA Hall, Lugogo in Kampala
HABARI DAILY I Kampala, Uganda I Officials have disclosed that the Ugandan Government is set to pay Umeme Ltd, the company that has been charged with distributing electricity in the country for the last 20 years, as a buy-out amount.
The government decided in late 2020 not to renew Umeme’s concession when it comes to its natural end. President Museveni has variously accused the company of sabotaging his industrialisation efforts by failing to lower power tariffs.
Umeme secured a 20-year concession to manage the power distribution in Uganda as a monopoly in 2005. It is listed on both the Uganda and Kenya stock exchanges.
It was brought on board as part of the government’s agenda to inject private investment into the sector which they said was needed to expand the national grid’s reach and boost efficiency.
Parting shot
Umeme’s parting shot has come in small, painful doses. Over the years, officials have complained the firm has been slow at expanding the number of new power connections and lowering the cost of power to consumers.
The Uganda Government finally decided to let go, and come 1st April 2025, electricity consumers will have the Uganda Electricity Distribution Company Ltd (UEDCL) as the new power distributor.
Pay day
Umeme’s pay day is now upon all the electricity consumers. The Auditor General has for as many months been carrying out an audit to ascertain Umeme’s investment portfolio, and has come out with a figure.
Opolot Okasaai, the state minister for energy recently disclosed that the Government is to pay $201m as a final buy out amount for Umeme as it ends its 20-year concession.
“The Auditor General has declared that Government pays $201m as a final buy out amount for Umeme as it ends its 20-year concession,” said Okasaai.
He further noted that last week an update of the audit report showed that the outstanding amount the Government has to pay Umeme is $201m, and that’s what it is prepared to pay.
Speaking during the 2nd Pre Budget dialogue organized by the Uganda Manufacturer’s Association (UMA) at their headquarters in Lugogo last week, he warned that this amount is accumulating interest and need to be offset at the earliest possible time.
“In the concession agreement we entered into with Umeme almost 20 years ago, there is compounding interest which accumulates daily if March 31 2025 passed without paying Umeme,” he noted, adding that in the first 30 days if Government doesn’t pay, it will be 10%.
Exaggerated amount
Okasaai said when they started talking of a takeover, the amount they expected to pay Umeme was well over $250 million.
“But we decided to do an audit. But you cannot do an audit of assets and of the finances to work out how much money we ought to pay Umeme before the concession came to the final end, which is a few days away,” he said.
Recently the Finance Ministry made a request to the Uganda Parliament to be allowed to borrow money from commercial banks to pay off Umeme’s claim.
Umeme’s (now exiting the concession) return on investment is expected to be paid by the Ugandan government, as outlined in the concession agreement and the government is working to secure the funds for the buyout.
The Government has now turned to Stanbic for the approximately Shs700 billion it need for the Umeme buyout. It has to pay the said monies within 91 days, short of which a 20 percent interest per annum will accrue.
