KAMPALA, Uganda — A storm is brewing between Umeme Limited and the Ugandan government over the final buyout valuation following the March 31 handover of the national power distribution network.
The power distributor, which operated Uganda’s electricity distribution grid for two decades under a 2005 concession agreement, is contesting the government’s proposed buyout figure of $118 million. Umeme insists the amount severely undervalues its unrecovered investments, which it pegs at $234 million.
In a statement issued Monday, Umeme confirmed it filed a formal dispute notice to the Ministry of Finance on April 11. This triggered a 30-day negotiation window under the original concession terms.
“Shareholders and investors are advised to exercise caution when dealing in the Company’s securities until the outcome of the dispute is known,” the company warned.
The conflict centers on the government’s reliance on a special audit by the Auditor General, which found Umeme’s outstanding investment to be worth 430 billion shillings (approx. $118 million). The Energy Ministry has accepted this figure, rejecting Umeme’s own valuation and a previously floated compromise of $190 million.
Energy Minister Ruth Nankabirwa said the government stands by the Auditor General’s findings.
“The Auditor General has audited and determined $118 million as the buyout amount,” she stated.
But Umeme disagrees, arguing the valuation fails to account for all capital expenditures made during its 20-year term and violates the buyout terms outlined in their agreement.
This standoff comes at a crucial time. The government has touted its decision to return grid control to the state-owned Uganda Electricity Distribution Company Limited (UEDCL) as a cost-saving move intended to improve service delivery and reduce electricity tariffs.
However, the unresolved buyout raises concerns over investor confidence, legal risk, and Uganda’s approach to public-private partnerships. If no resolution is reached by May 11, the dispute may move to international arbitration in London, as stipulated in the original agreement.
For context, Umeme’s 2005 concession saw the firm pour over $600 million into grid upgrades, maintenance, and network expansion. These investments were expected to be gradually recovered through electricity tariffs and, at the end of the contract, a fair buyout.
The ongoing wrangle is being closely watched by investors, development partners, and energy sector players alike. The final settlement could shape Uganda’s investment climate and influence the fate of future infrastructure partnerships.
Whether the next month brings compromise or courtroom drama, one thing is clear: the power handover may be complete, but the fallout is far from over.
