Uganda's electricity distribution landscape is undergoing a significant transformation as the government and Umeme Limited negotiate the financial details of the company's exit from its 20-year concession. The electricity distribution agreement concluded on February 28, 2025, with Umeme officially transferring operations to the state-owned Uganda Electricity Distribution Company Limited on April 1.
Umeme initially proposed a buyout amount of $234 million for infrastructure investments, but Auditor General Edward Akol recommended a substantially lower payment of $118 million. Parliament had previously approved borrowing $190 million from Stanbic Bank to facilitate the transaction, setting the stage for complex financial negotiations.
Umeme Chairman Patrick Bitature expressed clear disappointment with the government's offer, signaling potential challenges ahead. Over $120 million had already been deposited into Umeme's account, leaving a significant financial gap between the company's expectations and the government's assessment.
Energy Minister Ruth Nankabirwa emphasized a collaborative approach, promising a period of reconciliation between Umeme, the Auditor General, and other relevant parties. She highlighted ongoing work valued at $9.78 million and suggested further discussions to resolve outstanding financial discrepancies.
The stakes are high, with potential steep interest penalties for a delayed resolution. If negotiations extend beyond one month, Umeme could levy escalating interest charges: 10% for the first 30 to 45 days, increasing to 15% between 46 and 90 days, and potentially reaching 20% after 91 days, placing additional financial pressure on Ugandan taxpayers.
The unfolding dispute underscores the complex dynamics of public-private infrastructure partnerships and the challenges of fairly valuing long-term investment and infrastructure development. As discussions continue, both parties seek a resolution that balances financial fairness with the broader objectives of Uganda's electricity sector transformation.
Umeme initially proposed a buyout amount of $234 million for infrastructure investments, but Auditor General Edward Akol recommended a substantially lower payment of $118 million. Parliament had previously approved borrowing $190 million from Stanbic Bank to facilitate the transaction, setting the stage for complex financial negotiations.
Umeme Chairman Patrick Bitature expressed clear disappointment with the government's offer, signaling potential challenges ahead. Over $120 million had already been deposited into Umeme's account, leaving a significant financial gap between the company's expectations and the government's assessment.
Energy Minister Ruth Nankabirwa emphasized a collaborative approach, promising a period of reconciliation between Umeme, the Auditor General, and other relevant parties. She highlighted ongoing work valued at $9.78 million and suggested further discussions to resolve outstanding financial discrepancies.
The stakes are high, with potential steep interest penalties for a delayed resolution. If negotiations extend beyond one month, Umeme could levy escalating interest charges: 10% for the first 30 to 45 days, increasing to 15% between 46 and 90 days, and potentially reaching 20% after 91 days, placing additional financial pressure on Ugandan taxpayers.
The unfolding dispute underscores the complex dynamics of public-private infrastructure partnerships and the challenges of fairly valuing long-term investment and infrastructure development. As discussions continue, both parties seek a resolution that balances financial fairness with the broader objectives of Uganda's electricity sector transformation.
