Kampala. Finance minister Matia Kasaija has directed the Ministry of Energy and the Attorney General to finalise negotiations for the extension of Umeme’s concession before March.
In a February 12 letter seen by Daily Monitor, Mr Kasaija directed the Energy Ministry and the Attorney General to create a technical team to engage and finalise negotiations concerning the Umeme concession.
“This is to request you to nominate a technical team from all agencies herewith copied to commence and finalise negotiations under the Umeme concession within one month,” the letter reads in part.
The team, the letter indicates, will be drafted from Uganda Electricity Distribution Company Limited, Uganda Electricity Transmission Company Limited, Electricity Regulatory Authority, Solicitor General, Ministry of Justice, Director Private Public Partnership Unit, Director Privatisation Unit and Ministry of Energy.
The letter comes on the back of two presidential directives on November 28 2018 and January 17 2019 where
President Museveni directed for the commencement of negotiations to extend the Umeme concession.
Mr Kasaija yesterday told Daily Monitor there was need to expedite the negotiations to give Umeme assurance of contract extension.
“If we do not do so, (finalise negotiations), we will have a problem, because the contract is about to end and a lot needs to be done. If we agree for it to be renewed they can invest,” he said, explaining that Umeme cannot take investment decisions without being assured of the extension.
Umeme has a 20-year concession to distribute electricity, which is expected to expire in 2025.
Mr Kasaija said it was important that the extension is negotiated early enough to allow enough time for different stakeholders such as government to scrutinise it.
Ms Irene Muloni, the Energy Minister yesterday, said she was not aware of the letter.
“I have not seen the letter. You cannot ask me to comment on something I have not seen,” she said.
It is understood that the President has previously indicated that the negotiations should seek favourable terms that will eventually lead to a decrease in the price of electricity.
In December last year the Parliamentary Natural Resources Committee in December warned Electricity Regulator Authority not to force a situation where the concession would be extended before expiring.
“Please don’t be deceived that tomorrow we find you have extended the concession with Umeme before it expires,” Ms Ann Maria Nankabirwa, Kyankwanzi Woman MP and member of natural resources committee said.
Mr Stephen Illungole, the Umeme media coordinator, said the directive was good news, adding it gives the company confidence to mobilise funds for long-term investments.
“It will enable us mobilise and deploy long-term financing needed to evacuate the new generated power from Isimba and Karuma dams,” he said, adding that this will also enable them to enroll the remaining 250,000 customers on the prepayment billing system.
Reduce speculation: Mr Ramathan Ggoobi, an economist at Makerere University Business School, said the extension should be expedited to eliminate speculation in the electricity sub-sector that continues to undermine investment decisions.
Recently the President had sounded his disappointment with Umeme over continued failure to bring down the cost of electricity.
This had as a result caused a lot of speculation with some people indicating that the 20-year concession would not be extended.
Mr Ggoobi said he believes that government will negotiate better terms since the President has taken interest in the matter.