A Umeme technician at work. A fresh dispute has erupted over Umeme’s exit, with the Office of Attorney General (AG) putting an 11th-hour spanner in the works. PHOTO/FILE
Members of Parliament have initiated the process of buying out Umeme Ltd by approving the government’s proposal to borrow $190.9 million (Shs695.6 billion) from Stanbic Bank to facilitate this process.
After extensive disagreements, the legislators passed the proposal despite both the Majority and Minority reports from the Committee of National Economy advising against approval.
Committee chairperson John Ikojo requested that Parliament postpone approval until March 28, when the Auditor General (AG) Edward Akol is expected to present the final buyout amount.
However, the House decided to pass the loan approval based on State Minister for Finance Henry Musasizi's letter to Speaker Anita Among.
In the letter, which Ms Among asked him to read to the House, Mr Musasizi committed that the government would only pay Umeme Ltd the amount approved by the AG, even if it is lower than the borrowed loan.
Power distributor Umeme Ltd will cease operations on March 31, when its 20-year concession, which began in 2005, comes to an end. The State-owned Uganda Electricity Distribution Company Ltd (UEDCL) will assume Umeme’s responsibilities effective April 1.
The Committee reports unanimously recommended that the loan approval be postponed until AG Edward Akol presents his report, which will inform the amount of loan to be borrowed.
Mr Ikojo informed Parliament that the figures provided by Umeme, the Electricity Regulatory Authority (ERA), and the proposed loan are inconsistent, necessitating the AG’s report.
In line with the Lease and Assignment Agreement, Umeme submitted a claim of $235.9 million (Shs859.1 billion), which exceeds the $225.7 million (Shs822 billion) earlier estimated by the Ministry of Energy and Mineral Development.
“The draft special audit report for the end of the Lease and Assignment Agreement between Umeme and UEDCL has estimated the buyout amount at $190.98 million. Information from ERA indicates that their initial estimate of the Umeme buyout amount in September 2023, communicated to the Ministry of Energy and Mineral Development, was $225.75 million and has since been reduced to $127.66 million (Shs464.9 billion) in March 2025.
“The amount continues to fluctuate based on additional investments made by Umeme and recoveries from end-user tariffs,” he stated.
He added: “Given that the Auditor General has not yet determined the final buyout amount and considering the limited time remaining until the end of the LAA, the Auditor General must expeditiously reconcile with ERA and UEDCL to determine the final Umeme buyout cost and submit it to Parliament to guide the approval of the loan request. In light of these observations, the Committee recommends that the government proposal to borrow an amount equivalent to $190,988,556 from Stanbic Bank for the Umeme buyout be halted until the report of the Auditor General is presented to Parliament.”
Mr Ijoko’s report received support from the minority reports presented by his two committee members, Mr Charles Tebandeke of Bbaale County (NUP) and Mr Denis Oguzu Lee from Maracha County (FDC), who emphasized the importance of a thorough audit conducted by the AG.
Mr Oguzu urged the government to consider the Ex-crow account operated by Umeme and requested that all assets be made available so the government understands what they are paying for.
According to the report, Umeme Ltd invested an estimated $746.7 million (Shs2.7 trillion), including $10.8 million (Shs39.3 billion) invested in March this year, recovering $625.2 million and leaving a balance of $127 million.
Legislators were also prompted to pass the approval to avoid the interest charges that would apply should the government fail to buy out Umeme when the concession expires.
Section 12 of the Support Agreement between the government and Umeme, which discusses the expiry of the concession, states that;
“In the case of the expiry of the natural term, unless the transfer of the leased assets and payment of the buyout amount is delayed by the company, from and after the date that is 30 days following the end of the natural term, GoU shall pay the company interest on any outstanding portion of the buyout amount at an annual rate equal to 10 percent for the period from 30 days until 45 days after the end of the natural term, 15 percent for the period 46 days until 90 days after the end of the natural term, and 20 percent for the period after 91 days following the end of the natural term until GOU pays the buyout amount in full.”
Mr Musasizi informed legislators that approving the loan after the AG’s report next week would imply a delay in processing it, which would directly affect them and potentially result in the government incurring fines.
The committee also raised concerns about the loan itself, stating that it would become costlier in the future.
According to the loan concessionality, the nominal value of the loan is $190.9 million, the present value of the loan is $213.3 million (Shs776.8 billion), and the total debt service of the loan is $235.4 million (Shs857.3 billion).
“The present discounted value of the loan of $213.37 million is higher than the nominal value of the loan of $190.988 million. This implies that the total future payment of the loan is more expensive than the proposed amount to be borrowed in present terms. The total future payment of the loan will amount to $235.4 million after the loan period of five years,” Mr Ikojo explained.
Mr Oguzu and Ms Among both attributed this entire situation to those who neglected their responsibilities when the president announced that the Umeme concession would not be renewed.
