Govt pays UMEME sh433b

KAMPALA - The finance ministry has released sh433.9b to the energy ministry to pay the electricity distribution company (Umeme Limited), New Vision has learnt. 

The payment automatically triggers the transition of power distribution roles to Uganda Electricity Distribution Company Limited (UEDCL) effective April 1. 

In a letter to the energy ministry, dated March 27, the finance ministry also noted that the released Umeme buyout cash is in tandem with the recommendation of the Auditor General, Edward Akol. 

“The additional funds for third quarter are for Umeme buyout in accordance with the final figures established by the Auditor General of $118.3m. This significantly reduces from $190.3m that was originally approved by Parliament,” the permanent secretary of the finance ministry and secretary to the treasury, Ramathan Ggoobi, said. 

In a separate interview with New Vision, the deputy secretary to treasury, Patrick Ocailap, also confirmed the release of the money: “I can confirm that yes, the money has been released and I think the energy ministry should be able to pay the company today (Friday).” 

The finance ministry and secretary to the treasury, Ramathan Ggoobi.

Ocailap said he was happy that the Auditor General had even recommended a lower figure than what was approved by Parliament and claimed by Umeme. 

On March 20, Parliament adopted the proposal for Government to borrow $190.3m (sh700b) from Stanbic Bank, on condition of confirmation of actual monetary amount of Umeme’s investment by the Auditor General. 

In a special audit report on the end of the lease and assignment agreement between Umeme limited and UEDCL, the Auditor General, Edward Akol, recommended to the Government to pay Umeme Limited $118.3m instead of $190.3m which was approved by Parliament. 

Akol, however, said the buyout amount excluded $9.7m (sh34.1b) related to modifications that are work-in-progress at the end of the concession and will be subjected to verification by the Electricity Regulatory Authority (ERA) upon completion and submission by Umeme. 

“In addition, there were other modifications that have been excluded for various reasons such as incomplete support documentation, considered as repair and maintenance among others,” he said in his detailed audit report on Umeme buyout. 

Akol also recommended that the Government pays Umeme $118.3m not later than March 30. 

He, however, said ERA should verify the work-in-progress submitted by Umeme upon completion of the verification. 

The report was handed over to the Speaker of Parliament, Anita Among, in her office on Thursday and was later tabled in Parliament by the state minister for finance, Henry Musasizi. 

The House, chaired by Deputy Speaker Thomas Tayebwa, adopted the report despite protest from some of the opposition MPs. 

“The Auditor General submitted a special audit report, verifying and confirming the buyout amount of $118m against the approved $190. I urge the Government to put into consideration the special audit report when finalising with Umeme,” Tayebwa said. 

This, however, was protested by Kira municipality MP Ibrahim Nganda Ssemujju, who called for scrutiny of the report before it is adopted.

“We have never passed a report of the Auditor General without the MPs reading it. We have accountability committees that deal with the reports. Have you waived those particular rules that [now] reports can be passed without MPs processing them,” Ssemujju asked. 

The leader of the opposition in Parliament, Joel Ssenyonyi, questioned the move to adopt the report, saying by so doing, Parliament would be handing over its appropriation mandate to the Executive. But the Deputy Speaker guided that the special audit report, unlike annual reports, does not require to be referred to a committee. 

“This is a time-bound report; we must sort out Umeme by March 31 [2025]. It is a matter of beating deadlines, which is in the contract. If we do not settle, UMEME will have a blank cheque to determine penalties and interests,” Tayebwa said. 

Attorney General Kiryowa Kiwanuka

Last week, while discussing the $190.3m payout loan request, Attorney General Kiryowa Kiwanuka said the Government has up to March 31 to pay Umeme or pay a penalty of 10% for the first 30 to 45 days and 15% for 46 to 90 days. 

“This matter of Umeme buyout is urgent and the deadline for us to pay is March 31. If we don’t, we shall pay penalties and costs,” he said. Commenting on the Umeme buyout, Musasizi said: “After the buyout has been concluded, a report on the actual payment made will be provided to this House. Our commitment is to pay Umeme the amount as satisfied and approved by the Auditor General.” 

He contended that the electricity distribution network, currently managed by Umeme Limited and other small operators, faces critical investment gaps in upgrades, refurbishment and system performance improvements.

Musasizi added that despite two decades of private sector investment, challenges in access, affordability, reliability and service quality persist, necessitating a more sustainable and competitive funding mechanism. 

“Government decision not to renew the concession for Umeme Limited is, therefore, driven by the need to eliminate expensive private capital and optimise low-cost concessional or public financing in the distribution network while maintaining prudent best practices and efficiency of service delivery in alignment with the national vision and the goals enshrined in the energy policy of 2023,” he said. 

“As the concession of Umeme Limited comes to an end, the Government is obligated to compensate Umeme Limited for the unrecoverable capital investments following the Auditor General’s valuation and confirmation of the buyout amount claimed by Umeme limited in accordance with the lease and assignment agreement,” Musasizi said. 

Energy minister Ruth Nankabirwa

Yet despite the payment, it is not clear whether Umeme will accept the downsized offer by the Government. This week, Umeme, in a public notice to customers dated March 26, 2025, noted that they will only terminate their contract after the buyout amount of $234m (about sh800b) is paid and received. 

However, energy minister Ruth Nankabirwa said although the Government had received a notice from Umeme, it will only execute what the Auditor General has audited, which is $118m (about sh433b) as buyout amount for Umeme. 

“We expect by April1, 2025, Umeme limited to have handed over to UEDCL. Umeme Limited is free to petition,” she said. 

A source in Umeme said if the company disagrees with the sh433b government buyout cash, the concession gives it leeway to refer the matter to an international tribunal for arbitration. 

On the other hand, UEDCL officials said in a statement that they are not only ready to take over from Umeme on April 1, but the services to customers will also remain uninterrupted.

Conflicting figures 

Presenting a report on the loan request, National Economy Committee chairperson John Bosco Ikojo, who is also the Bukedea County MP (NRM), informed Parliament that in its initial claim, Umeme had submitted a claim amounting to $235.9m, far above the amount estimated by the ministry of energy of $225.75m in September 2023. 

Ikojo told Parliament that by March 2025, this figure had dropped to $127.66m, as a result of Umeme’s additional investments and recoveries from end-user tariffs. 

“The total estimated investments by Umeme as approved and verified by Electricity Regulatory Authority (ERA) amount to $746.798m inclusive of $10.84m to be invested by end of March 2025. The total amount recovered by Umeme is $625.22m, leaving a balance of $127.66m unrecovered,” Ikojo said. 

The MPs on the committee recommended that the Auditor General, ERA and Uganda Electricity Distribution Company Limited swiftly reconcile and determine the final Umeme buyout cost, given that it has yet to be finalised. 

They urged the Auditor General to submit the reconciled figure to Parliament to guide loan approval before the Lease and Assignment Agreement expires.