Legislators on the National Economy Committee have raised concerns over the government’s last-minute appeal for a US$190 million loan to facilitate the Umeme buyout.
According to Members of Parliament, the loan proposal was tabled for review barely a week before the government’s lease agreement with the power distributor expires on 1st March 2025.
While appearing before the committee on Tuesday, 25th February 2025, the Minister of State for Finance, Planning, and Economic Development (General Duties), Hon. Henry Musasizi, stated that Stanbic Bank would provide the loan for the buyout.
“The funds are intended to compensate Umeme Limited for unrecovered capital investments, as stipulated in the lease and assignment agreement,” Musasizi explained.
The Committee’s Deputy Chairperson, Hon. Robert Migadde, criticized the loan timeline as impractical, warning that delays in settling the buyout could result in penalties, including interest payments to Umeme.
“The proposed amount is an estimate, and I am unsure whether the Auditor General has verified this figure. The timeframe we are working with does not allow us to thoroughly examine this matter,” Migadde stated.
Hon. Stella Atyang (NRM, Moroto District Woman Representative) stressed the need for a comprehensive evaluation to determine the exact loan amount required for the buyout.
Dokolo North County MP, Hon. Moses Ogwal, questioned the government’s urgency in clearing Umeme’s dues while numerous other entities remain owed substantial sums.
“The private sector is owed over UGX 3 trillion by the government. What makes this debt exceptional? Are we setting a precedent for private companies to take the government to court over unpaid dues?” Ogwal inquired.
Koboko County MP, Hon. James Baba, also challenged the compensation, arguing that Umeme had been profitable over its two-decade operation.
“Why is this being rushed when we have not fully understood the details of the buyout? We have long known about Umeme’s contract expiry, so why the eleventh-hour rush?” Baba asked.
Hon. Denis Oguzu Lee (FDC, Maracha County) contended that Umeme should have already recovered its expenditures through consumer tariffs.
“The government has been implementing a feed-in tariff policy, allowing entities like Umeme to recoup their investments through electricity tariffs, as approved periodically by the Electricity Regulatory Authority,” Oguzu Lee noted.
In response, the State Minister for Energy, Hon. Sidronius Okaasai, clarified that the Auditor General had engaged an independent auditor, Grant Thornton Uganda, in July 2024 to assess and determine Umeme’s final buyout amount.
“After receiving additional documentation, the estimated buyout figure as of 24th February 2025 now stands at US$201 million, as per the latest report submitted to the Auditor General’s office,” Okaasai revealed.
He further stated that the Ministry of Finance is seeking an additional US$50 million to capitalize the Uganda Electricity Distribution Company Limited (UEDCL) to facilitate the transition from Umeme’s commitments.
Okaasai also emphasized that the buyout deadline is 31st March 2025, after which penalties for delayed payment will apply.
The Director of Economic Regulation at the Electricity Regulatory Authority (ERA), Geoffrey Okoboi, explained that Umeme had invested in substations with a minimum recovery period of 20 years— a target now constrained by the impending expiration of the concession agreement.
“Over the past 20 years, Umeme has invested approximately US$800 million, recovering about US$680 million. The outstanding balance remains to be settled, as full cost recovery cannot happen instantly,” Okoboi added.
