Umeme Buyout Revised to Shs699Bn as UEDCL Seeks Shs190Bn Loan to Take Over

The Ugandan government has revised the final buyout price for national power distributor Umeme to USD190.9 million, approximately Shs699 billion, from the earlier estimated USD191 million, about Shs700 billion. This development comes as Umeme’s concession ends on March 31, 2025.

Government Secures Loan for Buyout

To facilitate the buyout, the government has secured a loan of US$190 million (Shs699.938 billion) from Stanbic Bank, which was approved by Parliament.

While appearing before Parliament, the State Minister for Finance (General Duties), Henry Musasizi, and the Attorney General, Kiryowa Kiwanuka, said that the Government has up to March 31 to pay Umeme, failure to do which will attract a penalty of 10% for the first 30 to 45 days, 15% for the first 46 to 90 days, or 20% after 91 days.

Musasizi assured Parliament that a structured report on the actual payment would be provided to the House for deliberation and consideration after the buyout.

UEDCL Seeks Additional Funding

As Umeme prepares to exit, the Uganda Electricity Distribution Company Limited (UEDCL) is finalizing preparations to take over.

However, UEDCL requires an additional USD50 million, approximately Shs190 billion, to operate efficiently. According to Ruth Nankabirwa, the Minister for Energy and Mineral Resources, the Ministry of Finance is in advanced stages of securing this funding through internal borrowing to support UEDCL‘s capital investments.

“The Ministry of Finance and Economic Development is in advanced stages of securing USD50 million through internal borrowing to support UEDCL capital investments. By the end of the week, these funds will be available to ensure that UEDCL is financially equipped to improve the quality of service,” Nankabirwa said in a statement she issued this week.

Although it is clear that the money to finance the Umeme buyout is to be borrowed from Stanbic Bank, the Minister however didn’t reveal the exact financial institution that is to avail the government with funds for UEDCL.

Addressing Power Fluctuations

Umeme’s reign has been characterized by endless power blackouts, but the government is optimistic that UEDCL will solve this problem when they take over. Nankabirwa noted that Umeme will continue to work alongside UEDCL until the end of March 2025, after which UEDCL will take over and implement corrective measures to improve power reliability.

Implications for Stanbic Bank

The buyout and takeover of Umeme by UEDCL are expected to have significant implications for Stanbic Bank, which is providing the loan for the buyout, as well as for businesses that rely on stable power supply. This is because the move positions Stanbic Bank as a reliable development partner for the government willing to avail funding whenever required.

The successful transition from Umeme to UEDCL will be crucial in ensuring uninterrupted power supply and supporting economic growth.

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