Umeme Ltd has formally raised a dispute with the Ugandan government over the buyout compensation owed at the conclusion of its 20-year electricity distribution concession, citing a significant mismatch between its own valuation and that of the Auditor General.
In a public notice dated April 14, Umeme announced that it issued a formal Notice of Dispute to the Ministry of Finance on April 11, activating a 30-day negotiation window as stipulated in the 2005 Support Agreement.
“The Board of Directors of Umeme Limited wishes to inform shareholders and the investing public that the Company formally declared a dispute regarding the Buy Out Amount payable to the Company by the Government of Uganda,” the statement read.
The dispute stems from the failure to reach consensus on the amount due to Umeme after the official handover of the power distribution network to the Uganda Electricity Distribution Company Limited (UEDCL) on March 31.
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The disagreement follows months of negotiations regarding the buyout figure. Umeme submitted a valuation of $234 million to cover unrecovered investments, while the Auditor General, in a government-commissioned audit, placed the figure at $118 million (approximately Shs430 billion).
The Ministry of Energy adopted the Auditor General’s valuation, dismissing Umeme’s claim and an earlier estimate of $190 million (around Shs700 billion). Energy Minister Ruth Nankabirwa publicly reinforced this stance, stating, “The Auditor General has audited and determined $118 million as the buyout amount.”
At the core of the dispute is whether the government has met its obligations under the concession, particularly regarding reimbursement for investments not fully recovered during the 20-year term. Umeme argues that the auditor general’s figure undervalues its capital expenditures and breaches the terms outlined in the 2005 agreement.
Under Clause 9 of the Support Agreement, either party may escalate the matter to international arbitration if no settlement is reached within 30 days. If unresolved by May 11, the case will proceed to arbitration in London.
This dispute mechanism was established to ensure fair and neutral resolution—a framework both parties previously committed to uphold.
The ongoing conflict has rattled investor confidence, prompting Umeme to advise caution in trading its securities:
“Shareholders and investors are advised to exercise caution when dealing in the Company’s securities until the outcome of the Dispute is known,” the company cautioned in its statement.
The disagreement also clouds what was initially portrayed as a smooth transition of power distribution from private to public management. While the government has hailed the UEDCL takeover as a move toward affordable electricity and national control, the unresolved buyout question raises concerns over transparency, investor safeguards, and Uganda’s broader approach to public-private partnerships.
Since the concession began in 2005, Umeme has invested over $600 million in modernizing Uganda’s electricity distribution infrastructure. Although those assets have now been transferred to state ownership, the debate over their final valuation—and the financial responsibility—remains unresolved.
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