Members of the Committee of National Economy have expressed concerns over the Ugandan government’s last-minute request for a USD 190.0 mn loan to facilitate the buyout of Umeme.
The loan, expected to be secured from Stanbic Bank, was introduced just a week before the concession agreement with Umeme expires on March 30, 2025. The funds are intended to compensate Umeme for unrecovered capital investments, as stipulated in the lease and assignment agreement. Uganda aims to finalize the buyout before Umeme’s assets are transferred to the state-owned Uganda Electricity Distribution Company (UEDCL).
In 2022, the government announced it would not renew Umeme’s concession due to high electricity costs. Under the 2005 concession agreement, Uganda is obligated to reimburse the power utility company for any outstanding capital investments at the contract’s end. As of February 24, 2025, the estimated buyout amount stood at USD 201.0 mn.
Several MPs have questioned the urgency of settling Umeme’s debt, especially when other companies have substantial outstanding debts with the government.
The finance minister explained that any delay beyond the deadline could result in penalties, including potential interest charges payable to Umeme. The concession agreement also imposes a strict timeframe for the government to audit the company’s investments.
The Director of Economic Regulation at the Electricity Regulatory Authority stated that Umeme had invested approximately USD 832.0 mn in substations, with an expected recovery period of at least 20 years. To date, the company has recouped around USD 680.0 mn of this investment.
In January, the government granted UEDCL two licenses for distribution and sales, formally marking the end of Umeme’s concession.
Umeme was initially owned by a consortium led by the UK’s CDC Group plc before being acquired by private equity firm Actis in 2009. In 2014, Actis sold two-thirds of its stake to South Africa’s Investec Asset Management. By the end of 2023, Uganda’s National Social Security Fund (NSSF) was the largest shareholder (23.4%), followed by South African investment firm Allan Gray (14.8%).
Listed on both the Nairobi Securities Exchange and the Uganda Stock Exchange in 2012, Umeme became the most actively traded stock on Uganda’s bourse.
In 2024, Umeme was ranked the second-best dividend stock on the Nairobi Securities Exchange and had led both capital gains and dividend performance in 2023.
