Government is set to pay Shs802.17 billion ($215 million) to acquire majority shares in UMEME, the country’s main electricity distribution company.
This comes at a time when Umeme’s 20-year contract is scheduled to end in 2025.
The development came to light on Tuesday during a meeting between Parliament’s Committee of Environment and Natural Resources and officials from the Ministry of Energy officials led by, Irene Bateebe the Permanent Secretary.
Bateebe said that Uganda Electricity Distribution Company Limited (UEDCL) requires $158 million, approximately Shs589.5 billion to enable it to invest in the distribution system over the next three years.
This is meant to reduce the final Umeme buyout amount to $7.1 million when the concession ends. Bateebe said that as of December 2022, the buyout price was at $215 million.
“On an ongoing basis, Umeme is investing, and the Electricity Regulatory Authority- 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.
Bateebe said that if they attract concessional funding through UEDCL, the government can invest and gradually reduce Umemes’ investment.
She added that the figure of the final buyout could either decrease or increase based on the Auditor General’s investigations.
Members of Parliament have called on the Ministry of Energy to take action and ensure a steady energy supply for Ugandans during and after UMEME’s exit.
The committee noted that UMEME was failing to replace damaged transformers and poles due to its impending exit in 2025 and MPs raised concern over the possibility of widespread blackouts and power outages.
Polycarp Ogwari, the Agule County MP, asked the Committee Chairperson to ensure that the Ministry of Energy addresses the issue since the exit is still far away.
Dr. Emmanuel Otala, the Committee Chairperson expressed the need for the Ministry of Energy to take action and ensure that Umeme’s exit does not affect the electricity supply.
He tasked the Minister of State for Mineral Development, Peter Lokeris with the responsibility of finding a solution and providing clear information about who will take over after Umeme.
Eddie Kwizera, the Bukimbiri County MP tasked the ministry to provide their strategy for handling the Umeme exit.
“When you indicate the $63 million, yet we know that the company is absent on the ground; like in Kisoro, we don’t have them and when there is no power, there is no personnel, we need to know that there is the capacity for them to use the money,” he said.
Bateebe said UEDCL which will replace Umeme needs a capitalization of $64 million to build its capacity.