By On Thursday evening, Parliament approved a request from the Ministry of Finance to borrow Shs700 billion to facilitate the government’s buyout of Umeme Limited, the private electricity distributor.
The approval followed a tense debate, with Speaker Anita Among presiding over a session marked by sharp exchanges between lawmakers and State Minister for Finance (General Duties) Henry Musasizi. While some legislators supported the loan, others aligned with minority reports advising against its endorsement.
Both reports from the House Committee on National Economy recommended postponing the loan request until the Auditor General, Edward Akol, completes an ongoing assessment of the exact compensation owed to Umeme for its investments in Uganda.
“The Auditor General has not determined the final buyout amount. Given the limited time remaining before the contract ends, the Auditor General must reconcile figures with the Electricity Regulatory Authority (ERA) and the Uganda Electricity Distribution Company Limited (UEDCL) before Parliament approves the loan,” said John Bosco Ikojo, Chairperson of the National Economy Committee.
The committee, therefore, recommended halting the government’s plan to borrow up to the Euro equivalent of USD 190.9 million from Stanbic Bank until the audit report is submitted to Parliament.
Despite the opposition, Minister Musasizi insisted that the estimates for the loan request were based on the Auditor General’s draft special audit report conducted earlier in January.
“The decision to borrow was guided by the draft audit report on the lease and assignment agreement between Umeme Limited and UEDCL, which is set to expire in January 2025,” Musasizi told Parliament.
To allay concerns, he assured lawmakers that any excess funds from the loan would be canceled if the final audit recommends a lower buyout figure.
“Once the loan is approved, the government will only pay Umeme the amount verified and recommended by the Auditor General by March 31, 2025. If the required payment is lower, the balance of the loan will be canceled and will not add to the government’s debt,” he added.
However, his assurances failed to sway many MPs, with the debate drawing strong opposition.
Despite the resistance, some legislators, including Abdu Katuntu and Faith Nakut, supported the loan request, arguing that failure to secure funds in time could plunge Uganda’s electricity sector into a crisis.
Padyere County MP Isaac Otimgiw urged Speaker Among to put the matter to a vote. Following the vote, the Speaker ruled in favor of approving the loan.
The Civil Society Budget Advocacy Group (CSBAG) criticized the government’s borrowing plan, warning that it would significantly increase Uganda’s debt burden.
“The Umeme buyout loan raises concerns over debt sustainability. Borrowing on non-concessional terms will result in higher interest rates and shorter repayment periods, increasing budgetary pressure,” CSBAG noted in its assessment report.
The group also questioned the timing of the loan request, citing the proximity to the buyout deadline and potential penalties for default
Concerns over the buyout process were echoed by Energy Minister Ruth Nankabirwa, who told the House Committee on Natural Resources on Tuesday that her ministry was still uncertain about the exact amount required for the buyout.
Similarly, ERA CEO Ziria Tibalwa warned that the government might not be ready to take over Umeme’s operations.
“We are not even prepared with the USD 50 million needed for UEDCL to start operations. Additionally, the concession agreement does not allow UEDCL to step in at this point,” Tibalwa told the committee.
With Parliament now approving the loan, attention shifts to the final audit report and whether the government can execute the buyout process smoothly before Umeme’s concession ends.
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