By Our Reporter
NATIONAL
The government of Uganda has set March, 2025 as the date for the takeover of the Umeme concession by Uganda Electricity Distribution Company Limited (UEDCL).
The Umeme Concession signed in 2005 saw Uganda Electricity Distribution Company Limited leasing out it’s assets to the former with a clause allowing for its extension.
However, in March 2018, President Museveni asked to halt extension of the power distributor’s concession on the premise that terms such as return on investment had continued to be high thus affecting the electricity tariff.
Umeme’s Return on investment, (ROI) currently at 20 per cent is according to President too high leading to higher electricity tariffs.
President Museveni was also perturbed by the high energy losses that the latest report by Umeme indicated stood at slightly above 16 per cent from more than 35 per cent when it took over operations.
Efforts to renegotiate the concession terms hit a dead end with President Museveni insisting UMEME should go. This however, is coming with an enormous cost to the Ugandan government.
Speaking to the Budget Committee of Parliament today, 29th January, 2024, Emmanuel Otaala, Chairperson Parliament’s Natural Resources Committee said there’s need to get US$765.75 Million equivalent to Shs2.920Trillion to facilitate the takeover of the Umeme concession.
This money according to Otaala is to be secured through external funding.
Otaala says, Uganda Electricity Distribution Company Limited (UEDCL), wants US$540M (Shs2.059Trn), of which an initial investment of US$190Mn is required during the takeover process.
Meanwhile, the estimated UMEME buyout amount is US$225.75Mn (Shs860.806Bn) which is however still subject to final report by Auditor General, thus bringing total cost to US$765.75 Mn (Shs2.920Trn).
“Government should avail the necessary financing to ensure smooth transition and takeover from Umeme. The US$765.75Mn that UEDCL requires, it says it has been consulting various financial institutions in the world to support it in this cause and they are positive about it. So, this money will not be coming from Government directly, but from external funding,” Otaala said.
