Government has sold Uganda Electricity Distribution Company Ltd (UEDCL) to a UK-South African group in a deal which will see at least $65m (sh125b)invested over the next five years, the finance ministry said yesterday.
According to a release from the ministry the new company, Umeme Ltd will pay Government $1.4m once control has been transferred, an annual rental of $18m in the first year and invest $65m on the power grid over the next five years.
The firm will make at least 60,000 new connections during the same period.
The consortium, Commonwealth Development Corporation (CDC) subsidiary Globeleq Ltd and South Africaâ€™s Eskom Enterprises Ltd, will run the business over the next 20 years leasing the assets from Government during that time.
â€œWe are aiming at maximising new connections, decreasing power losses, expanding the network and increasing reliability of supply,â€ finance minister Gerald Ssendaula said at the signing.
â€œItâ€™s Governmentâ€™s belief that the improved efficiency by the concessionaire will reduce pressure on the tariff,â€ he said.
The Government may provide smart subsidies and avail concessional financing for capital developments to help the company attains its targets, he said.
Globeleq said they expect to take over within four months of the signing.
CDC-Globeleq vice-president David Grylls said they expect to take over after vital arrangements have been finalised.
â€œWe have to put in place a World Bank guarantee, organise insurance through MIGA, agree on the tariff structure and submit an investment programme to the regulators for approval,â€ Gryll said.
Umeme Ltd is discussing financing with National Social Security Fund, he said.
During peak hours 290MW of power are produced, short of current 300 MW demand. Demand is growing by an annual 8%.
UEDCL sold, $65m injection seen by 2010