Former Uganda’s electricity distributor, Umeme Ltd has initiated international arbitration proceedings in London against the Government of Uganda, seeking $292 million (approximately Shs1.1 trillion) in compensation related to the termination of its 20-year power distribution concession.
The core of the dispute centers on the government’s calculation of the final buyout value, which Umeme claims deviates from terms agreed upon in the concession. According to the contract, any unresolved disagreements must be resolved through binding international arbitration in London.
Umeme’s Managing Director, Selestino Babungi, said the company resorted to arbitration after attempts at good-faith negotiations failed to yield a mutual agreement by the deadline of May 20, 2025.
“We are ready, and that is why we officially notified the government,” Babungi stated.
He added, “They will be served with all relevant documents as stipulated in the agreement to allow the arbitration process to proceed.”
The power distributor said the legal action is intended to protect the interests of both local and international shareholders. Umeme’s ownership structure includes 40% local shareholders and 60% foreign investors. Notably, the National Social Security Fund (NSSF), which owns a 25% stake, stands to benefit significantly from any award.
Allan Rwakakooko, Umeme’s Head of Legal Services, noted that the duration of arbitration will depend on several factors, including the volume of documentation involved and the timeline for selecting arbitrators.
“We can’t provide an exact timeline yet. The timetable will be determined during the initial arbitration meeting,” he said.
The total claim has risen to $292 million following a partial government payment of $118 million (Shs427 billion) made in March. Babungi clarified that no interest has been factored into the latest figure.
“As of March 31, we had not concluded reconciliation of the final buyout amount, which explains the revised estimate,” he said.
Meanwhile, the Uganda Securities Exchange (USE) has extended the suspension of Umeme shares from trading until June 12. The move aims to protect investors amid uncertainty and prevent market volatility.
USE Chief Executive Officer, Paul Bwiso, said the suspension was necessary following the surprise government payment and ongoing developments.
“We wanted to ensure proper disclosure and information symmetry. Umeme has consistently maintained high standards in financial reporting,” Bwiso noted.
He added, “We’ll reopen trading once all relevant updates are communicated. Investors can then make informed decisions.”
The arbitration proceedings have also delayed Umeme’s financial reporting and its annual general meeting, as the asset valuation process which ties directly to financial statements, remains incomplete due to the unresolved dispute.
