The primary power distribution firm in the nation, UMEME, will be acquired by the government for 802.17 billion shillings (about $215 million).
This occurs as UMEME’s 20-year contract is set to expire in 2025.
The development was revealed on Tuesday during a meeting between the Permanent Secretary of the Ministry of Energy, Irene Bateebe, and members of the Parliament’s Committee on Environment and Natural Resources.
According to Bateebe, Uganda Electricity Distribution Company Limited (UEDCL) needs US Dollars 158 million, or roughly 589.5 billion Shillings, to fund distribution system improvements during the following three years.
As a result, when the concession expires, the final UMEME buyout payment will only be US$7.1 million.
According to Bateebe, the buyout price was US$215 million as of December 2022.
“Umeme makes investments on a regular basis, and the Electricity Regulatory Authority (ERA) has a method for recovering some of these investments from the tariff. According to the agreement, UEDCL has the option to enter the market right away and make an investment in the Umeme concession and asset.
According to Bateebe, if they are able to secure money at a reduced rate through UEDCL, the government will invest and gradually decrease Umemes’ stake.
She also said that depending on the results of the Auditor General’s inquiries, the total cost of the buyout might go down or up.
Parliamentarians have urged the Ministry of Energy to intervene and guarantee a consistent energy supply for Ugandans both during and after UMEME’s departure.
Due to UMEME’s planned departure in 2025, the committee noted that it was neglecting to replace broken transformers and poles. MPs also expressed concern about the potential for widespread blackouts and power outages.
Since the exit is still a ways off, Polycarp Ogwari, the MP for Agule County, asked the committee chairperson to see to it that the Ministry of Energy addressed the problem.
The committee’s chair, Dr. Emmanuel Otala, emphasized the necessity for the Ministry of Energy to take action and make sure that the electricity supply is not impacted by UMEME’s departure.
He gave Peter Lokeris, Minister of State for Mineral Development, the assignment to come up with a solution and make it clear who will succeed UMEME.
The ministry was tasked by Eddie Kwizera, the Bukimbiri County MP, to present their plan for handling the UMEME withdrawal.
“We need to know that there is the ability for them to use the money when you indicate the US Dollars 63 million, but we know that the company is not present on the ground, like in Kisoro, where we don’t have them and when there is no power, there is no personnel,” he added.
According to Bateebe, UEDCL, which would replace UMEME, needs to raise US$64 million in funding to expand its capabilities.