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ERA verifying Umeme assets to determine buyout amount
Government recently indicated it would not renew Umeme’s 20-year concession, which expires in 2025. Photo / File
What you need to know:
- The buyout amount, ERA says, will be known around March 25
- Energy Ministry says that as of December 2022, the buyout amount was estimated at Shs799b ($215m)
Electricity Regulatory Authority (ERA) has said it is in the process of conducting a cost analysis for the Umeme concession buyout, which, among others includes verifying recoverable investments.
Speaking in an interview yesterday, Eng Ziria Tibalwa Waako, the ERA chief executive officer, told Monitor the process to verify investments was yet to be completed, adding that the final buyout amount is expected to be revealed in March 2025 after the Auditor General has conducted cost and technical audits.
“We haven’t completed the verification process. It is just ongoing. I have seen numbers in newspapers. I am not sure who is giving those numbers,” she said, declining a request to estimate how much government would need for the buyout.
“I cannot give you a figure before the process has been completed,” she said.
However, on Tuesday Energy Permanent Secretary Irene Bateebe, had told the Parliamentary Committee on Environment and Natural Resources that the Umeme buyout, as of December last year, stood at Shs799b ($215m), which would be subject to an investment cost analysis.
Government last year indicated it would allow Umeme’s 20-year concession to come to a natural end. The concession is due to expire in 2025.
Electricity distribution is expected to revert to government under a new company that will be in charge of Uganda’s power sector.
Government is also trying to boost capacity of Uganda Electricity Distribution Company Limited (UEDCL), which owns the assets that were concessioned to Umeme.
Ms Bateebe, during the Parliamentary meeting, told MPs that UEDCL would require at least Shs587b ($158m) to invest in the distribution system in the next three years.
However, she said, Umeme is currently investing in some assets, part of which is recovered through tariffs.
“On an ongoing basis, Umeme is investing and ERA has a recovery mechanism where they recover part of this investment from the tariff. The Umeme concession and the asset remained on the books of UEDCL and the agreement provides for an option where UEDCL can come in and invest today,” she said.
Ms Bateebe also said UEDCL, whose assets were leased to Umeme, needs a capitalisation of $64m ( as a way of building its capacity), which will form part of government’s plan to fully takeover the electricity sector.
Umeme is currently Uganda’s largest power distributor with a customer base of about 1.75 million connections on the national grid.
In its financial report for the period ended 2022, Umeme indicated it would execute its mandate of electricity distribution up to the very end of concession before, transitioning and handing back leased assets to government.
In the same report, Umeme reported that profit after tax had increased to Shs148b from Shs139b in 2021, while earnings had marginally increased to Shs1.887 trillion from Shs1.885 trillion in 2021.
Umeme, which is listed on the Uganda Securities Exchange, is one of the largest and most profitable companies in Uganda.
