Parliament has ignored the report of its Committee on National Economy and the Auditor General, and approved the request by government to borrow US$190 million (Shs 699.938 billion) from Stanbic Bank for the buyout of Umeme.
Parliament’s Committee on National Economy recommended to Parliament to halt the approval of the US$190 million loan from Stanbic Bank for the buyout of Umeme in order to allow the Auditor General, Edward Akol to establish the actual amount owed to Umeme.
The US$ 190 million is the estimated amount that government will pay to Umeme for the investments the electricity company has not recovered following government’s decision not to renew its concession after 20 years.
The Committee recommendation was read to the full House by chairperson, John Ikojo while presenting the Committee report on the buyout loan proposal.
Ikojo informed Parliament that the loan of US$190 million (Shs699.938Bn) that Government is seeking from Stanbic Bank as buyout for Umeme is away above the US$127.66 million (Shs 467.863Bn) the company hasn’t recovered as part of its investment in Uganda.
Ikojo noted that evidence from the Regulator, the Electricity Regulatory Authority (ERA) indicates that Umeme has recouped most of its investment in Uganda
“Electricity Regulatory Authority (ERA) indicates that their initial estimate of the Umeme buyout amount in September 2023, communicated to the Ministry of Energy was US$225.75 million and it has since reduced to US$127.66 million in March 2025,” he said.
“The amount keeps changing based on the additional investments made by Umeme and recoveries from the end user tariffs. The total estimated investments by Umeme as approved and verified by ERA amount to US$746.798 million inclusive of US$10.84 million to be invested by end of March 2025. The total amount recovered by Umeme US$625.22 million leaving a balance of US$127.66 unrecovered,” he added.
“Given that the Auditor General has not determined the final buyout amount and considering the period remaining to come to the end of LAA, the Auditor General expeditiously reconciles with ERA and UEDCL to determine the final UMEME buyout cost and submit to Parliament to guide approval of the loan request. Given the above observations, the Committee recommends that the Government proposal to borrow up to Euro equivalent of USD 190,988,556 from Stanbic Bank for the UMEME buyout be halted until the report of the Auditor General is presented to Parliament,” Ikojo added as he read the Committee report.
Ikojo further informed lawmakers that at the end of the 5-year period within which government is expected to repay the US$190 million, Ugandan taxpayers would have paid US$235.41 million to Stanbic Bank.
This implies Ugandans will pay interest of $40m (Shs 162bn) on the five-year loan.
“The present discounted value of the loan of USD 213.37 million is higher than the nominal value of the loan USD 190.988 million. This implies that the total future payment of the loan is costlier than the proposed amount to be borrowed in present terms. The total future payment of the loan will amount to USD235.41 million after the loan period of 5 years. The loan is Commercial since its grant element (-11.7%) is significantly lower than the concessional limit of 35%,” he said.
Ikojo also informed Parliament that Umeme initially demanded Ugandan taxpayers to pay Shs 864.791 billion as compensation, which was way above the Shs 699.938Bn amount established in the initial special audit report.
“In line with the Lease and Assignment Agreement, Umeme submitted a claim of US$ 235,978,667 (Shs 864.791) which is above the US$225.75 million earlier estimated by the Ministry of Energy and Mineral Development. The draft special audit report for end of the Lease and Assignment Agreement between Umeme and UEDCL has estimated the buyout amount at USD 190,988,566.”
Escrow account
Maracha County MP, Denis Oguzu tasked government to explain how much money is being held in the Escrow Account that Umeme was meant to deposit its rental payments and other incomes, since the funds in this account could be used to fund the Umeme buyout.
“In the Leasing and Assignments Agreement, there is an account called the Escrow Account on which Umeme has been paying rent and other incomes. To date, nobody in this country knows what that account is holding and yet this same agreement provides that if there are any obligations, they can be paid from that account,” said Oguzu.
Oguzu also wondered why government opted to borrow from Stanbic Bank yet there were other options available in the Umeme Licensing Agreement for which the buyout amount could be drawn.
“There is what we call Liquidity Facility in the Leasing and Licensing Agreement. What that facility does, if Government isn’t ready to meet any obligations to Umeme, the guarantee under that Facility can actually be evoked. Up to now, we can’t understand why we have chosen to do borrowing when the option,” Oguzu wondered.
However, some other Members of Parliament supported the government’s action to borrow the money.
The Bugweri county lawmaker, Abdu Katuntu said that those who negotiated the Umeme deal on behalf of Ugandans were incompetent, adding that if government must borrow the money, pay Umeme off, and the company exits Uganda’s power sector.
He said that if money is not paid on time (March 31, 2025), it will attract interest on it.
The Attorney General, Kiryowa Kiwanuka informed Parliament of the heavy interest that Ugandan taxpayers will suffer if Umeme is not paid on time.
“If we fail to pay by the 31st of March, it will be 10% (interest) for the first 30 to 45 days, 15% from 46 to 90 days, and 20% after 91 days,” the Attorney General said.
The Speaker, Anita Among then put the matter to vote and was approved by majority members of the ruling NRM party.
