By Uganda’s electricity sector is facing fresh turbulence as Umeme Limited formally declared a dispute with the government over the amount owed following the end of its 20-year power distribution concession.
In a public notice issued on April 14, the company announced that it had served a Notice of Dispute to the Ministry of Finance on April 11, citing major discrepancies between its own valuation and that of the Auditor General. The notice triggered a 30-day negotiation window, ending May 11, as stipulated under the 2005 Support Agreement.
At the heart of the standoff is the buyout amount the government is required to pay Umeme for unrecouped investments. While Umeme values these at $234 million, a special audit by the Auditor General placed the figure at just $118 million a near 50% reduction.
Related
Umeme Hands Over Power Distribution to UEDCL Today
Parliament Approves Shs700 Billion Loan for Umeme Buyout Amid Heated Debate
UEDCL Takes Over Power Distribution as UMEME Concludes 20-Year Concession
Umeme argues that the government’s valuation undermines the capital it invested and violates the terms of the original concession. The utility company insists that the $118 million assessment fails to reflect the true cost of the upgrades and reforms it undertook during its two-decade stewardship of the national grid.
The company’s statement warned shareholders and investors to tread cautiously. “Shareholders and investors are advised to exercise caution when dealing in the Company’s securities until the outcome of the dispute is known,” the board said.
Should the parties fail to reach an agreement during the negotiation period, Clause 9 of the Support Agreement allows either side to escalate the matter to international arbitration in London, a provision both parties agreed to back in 2005 to guarantee fair dispute resolution.
The government has recently hailed the March 31 transfer of the grid to Uganda Electricity Distribution Company Limited (UEDCL) as a milestone toward lowering electricity tariffs and regaining full state control over power distribution.
Related
UEDCL Pledges Improved Power Distribution Following Umeme Takeover
Umeme Hands Over Power Distribution to UEDCL Today
UMEME Ordered To Pay 500m In Damages
Umeme took over Uganda’s power distribution under a 20-year concession agreement signed in 2005 as part of the country’s efforts to revamp its struggling electricity sector. Backed by World Bank-led reforms, the deal tasked Umeme with managing, maintaining, and investing in the electricity distribution network.
Over the course of the concession, the company says it invested more than $600 million in upgrading infrastructure, improving access, and reducing power losses. Despite periodic public criticism over billing, outages, and customer service, Umeme maintained that it delivered substantial reforms and laid the groundwork for future improvements in power reliability.
The concession officially ended on March 31, 2025, with full operational control reverting to the state-owned UEDCL.
