The government of Uganda is set to pay US$215 million to acquire majority shares of power distributor, Umeme.
The move comes as Umeme’s 20 year contract comes to a close in 2025, giving government full control of the power distribution system, marking the end of a long standing private sector arrangement.
During a meeting between the Committee of Environment and Natural Resources and the Ministry of Energy officials on Tuesday, 11 April 2023, the Permanent Secretary, Irene Bateebe revealed that Uganda Electricity Distribution Company Limited (UEDCL) requires US$158 million to enable it to invest in the distribution system over the next three years.
This is meant to reduce the final buyout amount payable to Umeme to US$7.1 million when the concession comes to its natural end.
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Bateebe said that as of December 2022, the buyout price was at US$215 million.
“On an ongoing basis, Umeme is investing and ERA has a recovery mechanism where they recover part of this investment from the tariff. The Umeme concession and the asset remained on the books of UEDCL and the agreement provides for an option where UEDCL can come in and invest today,” she said.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry