In a fresh twist of events, the Auditor General, Edward Akol, has revised the figure for the Umeme buyout from the earlier estimated Shs700.218 billion to Sh432.677 billion, a move that’s bound to spark controversy.
The Speaker of Parliament Rt. Hon. Anita Among has revealed that Parliament has been informed by Akol that the US$190,988,556 (Shs700.218 billion) loan from Stanbic Bank meant for Umeme buyout was in excess of Shs267.614 billion, because the only amount due to Umeme is US$118m (Sh432.677 billion).
Among made the revelation while receiving the audit report on the end of the Umeme Concession from the Akol, where she indicated that Parliament agreed to pass the loan on condition that the amount to be paid to Umeme would be the one audited by the Auditor General.
Umeme is set to hand over power distribution in the country to the Uganda Electricity Distribution Company Limited (U.E.D.C.L) on March 31, 2025, following the expiry of its 20-year concession, and the government of Uganda seeks a loan from Stanbic Bank for the buyout.
The initial estimate of the buyout figure varied widely, with reports suggesting figures ranging from US$127.6 million to US$271 million.
However, the Auditor General’s revised figure brings much-needed clarity to the process, although it remains to be seen how this development will impact the government’s plans for the Umeme concession.
Background of the Buyout
Umeme, a listed company on the Uganda Securities Exchange and the Nairobi Securities Exchange, has been the primary electricity distributor in Uganda since 2005. However, the company’s performance has been marred by controversy, including high electricity tariffs, frequent power outages, and concerns over its operational efficiency.
Terms of the Buyout
The Government of Uganda acquired Umeme’s 99.99% stake in the company for a reported Shs853 billion (approximately USD 230 million). The acquisition was facilitated through the Uganda Electricity Generation Company Limited (UEGCL), a state-owned entity responsible for electricity generation.
Implications of the Buyout
The buyout is expected to have far-reaching implications for Uganda’s energy sector:
Increased Government Control
The acquisition gives the Government of Uganda direct control over the electricity distribution sector, enabling it to make strategic decisions on energy policy and regulation.
Potential for Reduced Electricity Tariffs
With the government at the helm, there is potential for reduced electricity tariffs, as the state may be able to negotiate better deals with electricity generators and transmission companies.
Improved Operational Efficiency
The government has pledged to improve Umeme’s operational efficiency, which could lead to reduced power outages and enhanced customer service.
Increased Investment in the Energy Sector
The buyout may attract new investment in the energy sector, as the government seeks to upgrade and expand Uganda’s energy infrastructure.
Challenges Ahead
While the buyout presents opportunities for growth and development, there are challenges ahead:
Managing the Transition
The government must navigate the complex process of transitioning Umeme’s operations, ensuring minimal disruption to electricity supply and services.
Addressing Legacy Issues
The government will need to address long-standing issues, such as high electricity tariffs, power outages, and concerns over operational efficiency.
Ensuring Transparency and Accountability
The government must ensure transparency and accountability in the management of Umeme to avoid the pitfalls of corruption and mismanagement.
Umeme Rejects Akol’s Figure, Reassures Shareholders
Amidst all the controversy surrounding the buyout, Umeme has since assured its shareholders that the company will remain listed on the U.S.E and they shall continue receiving their dividends even after the takeover of the company by the government.
According to a statement issued by Umeme today, whereas Akol quotes US$118m (Sh432.677 billion), the company insists that the buyout amount estimate submitted to the government is US$ 234 million (about Shs859.8 billion). The statement adds that upon receiving the audit report from the Government of Uganda, Umeme will review the findings and determine the necessary course of action, if any.
And, once the audit is complete, Umeme will update its shareholders and inform them of any proposed actions, if necessary. In addition, due to the impact of the Buy Out Amount on the Company’s financial statements, the finalization and publication of the financial results have been delayed until the Buy Out Amount is resolved.
The Government of Uganda’s buyout of Umeme marks a significant turning point in the country’s energy sector. While challenges lie ahead, the acquisition presents opportunities for growth, improved operational efficiency, and increased government control. As the government navigates this new landscape, it must prioritize transparency, accountability, and the needs of the Ugandan people.