Kampala, Uganda — In a significant move that marks the end of an era, the Ugandan Parliament has approved a $190 million buyout of Umeme Limited's concession, effectively paving the way for the government to fully control the country's electricity distribution.
The decision, which comes after months of negotiations and deliberations, signals a major shift in Uganda's energy sector and has sparked widespread debate among stakeholders.
Umeme Limited, a publicly listed energy distribution company, has been operating in Uganda since 2005 under a 20-year concession agreement with the government.
The company took over the management of Uganda's electricity distribution network from the state-owned Uganda Electricity Distribution Company Limited (UEDCL).
Over the years, Umeme has played a pivotal role in improving the efficiency and reliability of electricity distribution across the country.
The company has invested heavily in infrastructure upgrades, reduced technical losses, and expanded access to electricity, particularly in rural areas.
However, the concession agreement has been a subject of controversy. Critics have argued that the terms of the deal were unfavorable to the government, with Umeme earning significant profits while the government bore the brunt of losses.
As the concession neared its end on March 31st, calls for the government to take over the distribution network grew louder, culminating in the recent parliamentary approval of the buyout.
Regain energy control
The $190 million buyout, approved by Parliament, will see the government acquire Umeme's assets and take over the management of the electricity distribution network.
The funds will be used to compensate Umeme for its investments and to facilitate a smooth transition of operations back to the government. The decision to buy out Umeme's concession is part of the government's broader strategy to regain control of key utilities and infrastructure.
Proponents of the move argue that it will allow the government to better align electricity distribution with national development goals, particularly in rural electrification and industrial growth.
Additionally, it is expected to reduce the cost of electricity for consumers, as the government will no longer be obligated to pay concession fees to a private entity.
Supporters of the government decision, including some Members of Parliament and energy sector experts, have hailed it as a step in the right direction.
Backers vs critics
They argue that the government's takeover will lead to more equitable distribution of electricity and greater accountability in the management of the sector.
"This is a historic moment for Uganda's energy sector," said Sarah Opendi, a member of the Parliamentary Committee on Natural Resources.
"By taking over Umeme's concession, the government can now focus on expanding access to electricity, especially in underserved areas, and ensure that the benefits of our energy resources are shared by all Ugandans."
However, critics have raised concerns about the government's capacity to manage the distribution network efficiently. Some fear that the transition could lead to a decline in service quality, citing past experiences with state-run utilities. Others have questioned the financial implications of the buyout, arguing that the $190 million could have been better spent on other pressing national priorities.
"While the intention to take over Umeme's concession is commendable, we must be cautious," said Dr. Fred Muhumuza, an economist and energy policy analyst. "The government needs to demonstrate that it has the technical and managerial capacity to run the distribution network effectively. Otherwise, we risk reversing the gains made over the past two decades."
With the parliamentary approval secured, the focus now shifts to the implementation of the buyout. The government has assured stakeholders that the transition will be seamless, with minimal disruption to electricity supply.
Plans are already underway to strengthen the capacity of the Uganda Electricity Distribution Company Limited (UEDCL), which will take over the distribution network. In the long term, the government aims to leverage the buyout to accelerate its rural electrification program and support industrial growth. By taking control of the distribution network, the government hopes to reduce the cost of electricity, attract more investors, and create jobs in the energy sector.
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Discrepancies in buyout
In recent weeks, Ugandan government officials have issued conflicting statements regarding the buyout amount for electricity distributor Umeme Limited, creating confusion among stakeholders. Energy Minister Ruth Nankabirwa announced that Parliament approved a $190 million loan from Stanbic Bank to compensate Umeme for unrecovered investments after its concession expires at the end of March 2025.
However, State Minister for Energy Sidronius Okaasai indicated that the estimated buyout figure, as of February 24, 2025, stands at $201 million, according to a report submitted to the Auditor General's office.
Adding to the discrepancies, the Electricity Regulatory Authority (ERA) initially estimated the buyout amount at $225.75 million in September 2023, but later revised it to $127.66 million in March 2025, based on additional investments made by Umeme and recoveries from end-user tariffs.
These varying figures have raised concerns among legislators, prompting calls for a thorough audit to determine the exact buyout amount.
