The government is set to pay $215 million (about Shs802 billion) to acquire majority shares of power distributor, Umeme.
The move comes as Umeme’s 20-year contract comes to a close in 2025, giving the government full control of the power distribution system, marking the end of a long-standing private sector arrangement.
During a meeting between the Committee of Environment and Natural Resources and the Ministry of Energy officials on Tuesday, the Permanent Secretary, Irene Bateebe revealed that Uganda Electricity Distribution Company Limited (UEDCL) requires $158 million (about Shs590 billion) to enable it to invest in the distribution system over the next three years.
This is meant to reduce the final buyout amount payable to Umeme to $7.1 million (about Shs26 billion) when the concession comes to its natural end.
Bateebe said that as of December 2022, the buyout price was at $215 million.
“On an ongoing basis, Umeme is investing and 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.
She said that if they attract concessional funding through UEDCL, the government can invest and gradually reduce Umemes’ investment.
Bateebe added that the figure of the final buyout could either decrease or increase based on the Auditor General’s investigations.
Meanwhile, 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.
Umeme is reportedly failing to replace damaged transformers and poles due to its impending exit in 2025.
This development has raised concerns among Members of Parliament over the possibility of widespread blackouts and power outages.
Dr. Emmanuel Otala, the Chairperson of the Natural Resources Committee, 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 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.
Irene Bateebe said UEDCL which will replace Umeme needs a capitalization of $64 million (about Shs239 billion) to build its capacity.