Govt Hunts for $50M to Sink into UEDCL as UMEME Exits

The Ministry of Energy and Mineral Development has reaffirmed that it is fully ready to take over the electricity distribution concession from Umeme Ltd through state-owned Uganda Electricity Distribution Company Limited (UEDCL) on April 1, 2025.

This comes amidst concerns raised by the Parliament on Tuesday, especially regarding funding.

About 900 Billion Shillings could be required to complete the transition process that includes buying out UMEME Ltd and capitalising UEDCL to make it ready to take off the distribution network.

It is estimated that the buyout could amount to 200 Million Dollars after all the valuation, while another 50 million will go to UEDCL.

The buyout amount is a claim by UMEME for capital investments made and not recovered by the end of the concession, as the investments will now be taken over by the government.

The ministries of energy and mineral development and finance, planning and economic development, are in Parliament pushing for a loan to cover the costs.

“The Ministry of Finance, Planning, and Economic Development is in advanced stages of securing US$50 million through internal borrowing to support UEDCL capital investments,” says a statement from the Ministry of Energy.

The ministry says that by the end of next week, these funds will be available to ensure that UEDCL is financially equipped to improve the quality of service.

“Additionally, approval of the buyout amount by Parliament is in advanced stages to support the timely payment of UMEME,” it adds.

There were also concerns about the fate the of staff of UMEME after the concession ends.

Two years back, when the government decided not to renew the UMEME concession, it promised that all the employees would be absorbed into UEDCL, as the agency was deemed not to have all the capacity that would be required to take on the mantle.

However, it has now come out that many will not be taken on, especially those whose roles are already occupied by the existing staff of UEDCL, according to Minister Ruth Nankabirwa who addressed members of parliament on Tuesday.

This further confirms the Government’s unwavering commitment to honouring its contractual obligations while ensuring a smooth transition in the electricity distribution sector.

In the new statement, the Ministry emphasizes that the restructuring process by UEDCL aims to enhance efficiency, avoid duplication of roles, and ensure cost-effectiveness in electricity distribution. 

“The recruitment process has been fair, transparent, and merit-based, ensuring that the best-qualified personnel are retained while prioritizing operational efficiency.”

On the quality of service, the statement issued by the Assistant Commissioner, of Communication and Information Management says they are ensuring that in the remaining days to the end of the concession, consumers are not highly affected.
“The Ministry takes note of the current power reliability challenges and has required UMEME to continue fulfilling it’s contractual obligations till the end of March 2025 while preparing UEDCL to ensure immediate corrective measures after 1st April 2025,” it says.