A dispute has arisen between the electricity company, Umeme Limited, and the Government of Uganda over the buyout amount for the company’s exit from Uganda’s electricity sector, following the government decision to terminate Umeme’s 20-year concession.
The 20-year Umeme Concession for electricity distribution ended after the 28th of February 2025 and is currently in the Retransfer Transition Period.
Umeme will hand over the distribution system to the government-owned company, the Uganda Electricity Distribution Company Limited (UEDCL).
UEDCL will officially take over from Umeme on April 1, 2025.
As per the agreement, the government is required to pay Umeme the money the company has not recouped from the investments it has made in Uganda’s electricity infrastructure, which is known as the buyout amount.
Umeme submitted an estimated buyout amount of USD 234 million, which has been scrutinized by the Office of the Auditor General.
Today, Thursday, the Auditor General, Edward Akol, submitted the final audit reports for the Umeme concession to the Speaker of Parliament, Anitah Among.
In the report, the Auditor General recommended the payment of only USD 118 million against the USD 234 million that Umeme seeks.
On Wednesday, Umeme said that its “rights to the Distribution System (including the right to operate the Distribution System) under the Concession Agreements will only terminate at the end of the Retransfer Transition Period, which shall only occur once the Buy Out Amount is paid by the Government of Uganda and received by Umeme.”
The buyout amount must be paid within 30 days following the end of the concession term, specifically by 31st March 2025.
“If the payment is not received by this deadline, penal interest will be applied as stipulated in the Concession Agreements,” Umeme said.
It added, “In accordance with the Concession Agreements, the Distribution System will only be retransferred to UEDCL or its nominee upon receipt of the Buy Out Amount by Umeme.”
In response, the Minister of Energy and Mineral Development, Ruth Nankabirwa, said that the government will only pay the amount recommended by the Auditor General, making it clear that the buyout amount Umeme is seeking will not be met.
“We, as the government, are in receipt of this notice from Umeme Ltd. As government, we shall ONLY execute what the Auditor General has audited, which is $118M as the buyout amount for UMEME, and we expect by 1st April Umeme Ltd. to have handed over to UEDCL,” she said.
Additionally, UEDCL issued a statement informing the public that all Umeme operations, including the sale and distribution of electricity in Uganda, will terminate on 31st March 2025.
“UEDCL will become the power operator effective April 1, 2025, as per ERA Licenses No. ERA/LIC/DIS/024/231 & ERA/LIC/DIS/024/232. UEDCL assures all customers (UEDCL and Umeme) that services will be uninterrupted. All electricity units acquired before April 1, 2025, and not used by customers on their meter accounts, will remain valid. Normal electricity vending and loading for all customers will continue on MTN, Airtel, banks, and other collection platforms.”
As the situation unfolds, many Ugandans are worried that the tension between the parties could interrupt power supply and reliability during this transition period.
