East African country, Uganda is planning to borrow $190 million from Stanbic Bank to compensate country’s largest utility power compnay, Umeme Limited, for its investments in the national grid after the company’s concession expires next month.
Musasizi Aringanyira, Minister of State for Finance, Planning, and Economic Development, proposed the loan of up to $19 million (or its euro equivalent) to the 11th parliament of Uganda on Tuesday.
The funds would be used to purchase assets from Umeme Limited and Uganda must pay Umeme back for any capital investments that remain unrecouped at the conclusion of the contract.
To ascertain the precise amount, the Auditor General was entrusted by the Ministry of Energy and Mineral Development to carry out a thorough valuation audit.
Speaking before Parliament’s Committee on Environment and Natural Resources recently, Permanent Secretary Irene Batebe stated that the audit will ensure a fair and transparent valuation process.
“The Auditor General is supporting us in undertaking a valuation exercise that will give us the gross or ultimate buyout amount. By the start of the next month, we will be aware of the exact amount,” Batebe stated.
This move follows earlier projections from a top energy ministry official that Uganda would need to pay Umeme Limited nearly $225 million after its concession expires in March 2025. This payment would allow the utility to recoup its investments in the national grid.
Meanwhile, in January 2025, the Ugandan government formally declined Umeme’s request to extend its concession.
Batebe outlined plans to contract a private company for a joint venture with the state-owned Uganda Electricity Distribution Company Limited (UEDCL) to manage the grid after Umeme’s concession ends.
The Committee on National Economy has been assigned to further review the loan request
Umeme, a company traded on the Ugandan and Kenyan stock exchanges, has operated Uganda’s power concession since 2005. The Ugandan government rejected Umeme’s bid to extend the 20-year concession, which expires next month.
The company has invested significantly in upgrading and expanding the East African country’s grid infrastructure during its concession period.
