KAMPALA, March 19, 2025 – Government through the The Ministry of Energy and Mineral Development [MEMD] has reaffirmed readiness to take over the electricity distribution concession from UMEME Ltd. through the Uganda Electricity Distribution Company Limited [UEDCL], effective April 1, 2025.
According to the latest press release from MEND, The Ministry of Finance, Planning, and Economic Development is in the advanced stages of securing US$ 50 million [ about Shs 185 billion] through internal borrowing to support UEDCL’s capital investments.
The press release says the funds will be available by the end of next week to ensure that UEDCL is financially equipped to improve service quality.
“Parliament is in the final stages of approving the Buyout amount, which will facilitate the timely payment to Umeme. This Buyout amount represents a claim by Umeme for capital investments made but not recovered by the end of the concession. This confirms the government’s unwavering commitment to honoring its contractual obligations while ensuring a smooth transition in the electricity distribution sector,” the press release reads in part.
The Ministry emphasizes that UEDCL’s restructuring aims to enhance efficiency, eliminate duplication of roles, and ensure cost-effectiveness in electricity distribution. The recruitment process has been fair, transparent, and merit-based, ensuring that the most qualified personnel are retained while prioritising operational efficiency.
The Ministry acknowledges the current power reliability challenges and has directed UMEME to continue fulfilling its contractual obligations until March 2025 while preparing UEDCL for a seamless transition.
UMEME Ltd. signed the electricity distribution concession for 20 years, from March 1, 2005, until April 1, 2025. The country’s primary power distributor for the past two decades, will exit the market when its concession expires on March 31, 2025.
UMEME is known for chronic unreliability and has been accused of corruption. Customers frequently face extended service outages, which are occasionally followed by protests, riots, and assaults on Umeme employees.
In 2013, a probe committee of Uganda’s Parliament recommended cancellation of UMEME’s contract due to its chronic failure to provide reliable services, which would trigger a contract severance payment of at least US$148 million.
The following year, Uganda’s Parliament recommended that UMEME’s “contract should be terminated” due to the gross manipulations encountered in the procurement of the Umeme concession, and the scandalous provisions of the power distribution agreements signed between the government of Uganda and UMEME. Ultimately, this course of action was decided against because it would have been too expensive and politically complicated.
The National Social Security Fund [NSSF] is the largest institutional shareholder in UMEME with shares of 23.20 percent. UMEME Ltd. is listed both on Uganda Securities Exchange [USE], and Nairobi Securities Exchange [NSE].
https://thecooperator.news/parliament-queries-last-minute-loan-request-for-umeme-buyout/
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