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The Ugandan government is seeking to borrow approximately UGX 697.8 billion (US$190.99 million) from Stanbic Bank to facilitate the buyout of Umeme Limited, the country's main electricity distributor.
This proposal was tabled by the Minister of State for Finance (General Duties) during the parliamentary session on Tuesday, February 18, 2025.
Speaker of Parliament Hon Anitah Among referred the request to the Committee of National Economy.
Umeme's 20-year concession is scheduled to conclude on March 31, 2025. In preparation for this transition, the government has decided not to renew the concession and plans to transfer electricity distribution responsibilities to the Uganda Electricity Distribution Company Limited (UEDCL), a state-owned enterprise.
The government hopes to consolidate control over the energy sector and ensure more affordable and reliable electricity services for Ugandans.
The buyout amount has been a subject of discussion, with estimates varying over time. In early 2024, the government projected a payment of approximately US$225 million to Umeme to cover unrecovered investments in the national grid upon the concession's end.
However, more recent figures suggest the buyout could be around US$190.99 million, as indicated by the current loan proposal. The final amount is expected to be confirmed following a comprehensive audit by the Auditor General.
To ensure a seamless transition, the Ministry of Energy and Mineral Development has officially handed over the electricity distribution license to UEDCL.
Minister Dr. Ruth Nankabirwa Ssentamu has assured the public of uninterrupted electricity services during this period, emphasizing the government's commitment to maintaining existing tariff structures and improving service delivery.
She stated, "The government remains fully committed to the continuity of electricity services. Existing tariff packages, as approved by the Electricity Regulatory Authority (ERA), will remain operational."
UEDCL has been preparing for this takeover by enhancing its operational capacity.
The company has gained experience by managing several smaller electricity distribution concessions over the past decade, which has bolstered its readiness to assume control of the national distribution network.
UEDCL's Managing Director, Paul Mwesigwa, expressed confidence in the company's ability to manage the transition effectively, highlighting the growth in customer numbers and revenue as indicators of their preparedness.
The proposed loan from Stanbic Bank is intended to finance the buyout and support UEDCL's initial operations during the transition.
The government aims to secure this funding promptly to meet the financial obligations associated with the buyout and to facilitate the smooth transfer of assets and responsibilities from Umeme to UEDCL.