The Ugandan government has formalized plans for the transition following the conclusion of the concession for power distributor Umeme, set to end in March 2025. Umeme, a prominent player in the sector for the past 19 years, is renowned for introducing Yaka prepaid meters during its tenure.
The Minister of Energy, Ruth Nankabirwa, confirmed that the concession agreement with Umeme will naturally conclude after 20 years at the beginning of March 2025. Preparations are already underway for Umeme to revert the concession to Uganda Electricity Distribution Company Limited (UEDCL).
To oversee this transition, Minister Nankabirwa established a Joint Technical Committee (JTC), which includes representatives from the Ministry of Energy and Mineral Development, Secretary to the Treasury, Attorney General, Uganda Electricity Distribution Company Limited, Uganda Electricity Transmission Company Limited, Privatization Unit, and the Electricity Regulatory Authority (ERA). This committee successfully managed the exit of the South African company ESKOM Uganda Limited from Nalubale and Kiira dams in Jinja.
The government aims to support UEDCL in taking over Umeme’s operations by April 1, 2025. As part of the preparations, the government has sought to capitalize UEDCL with sixty-four million dollars, some of which will cover operational costs, potentially including the absorption of Umeme’s employees.
Umeme, listed on the Uganda Securities Exchange and cross-listed on the Nairobi Securities Exchange, may undergo a significant change in ownership post-concession. The government is considering acquiring a majority share, with estimates suggesting a payment of up to $215 million. Umeme’s recovery of investments over the years may influence the final buyout amount, expected to be determined by the Auditor General.
The power distributor, leaving behind a network comprising over 44,000 kilometers of distribution lines and 15,000 transformers, has been serving approximately 1.9 million customers, a substantial increase from its entry into the concession with about 250,000 customers.
Despite discussions about extending the concession, disagreements on Umeme’s 20% return on investment led to the government’s decision not to extend the agreement. However, there are indications that Umeme could potentially return to the distribution sector post-2025. A proposal suggests the formation of a special purpose vehicle involving UEDCL and a private investor, with Umeme having a high chance of clinching the deal due to its experience and established structures across the country.
