Following months of speculation on its future in Uganda, Government has finally written to electricity distribution company, UMEME of its decision not to renew its contract in Uganda.
The pronouncement was made by Peter Kauju, Head of Communication of UMEME on his twitter handle where he shared a statement from the company’s Management of Government’s latest decision.
The press release read in part, “The company has finally received written communication from Government of Uganda notifying it that the current concession will continue to run until its natural end in March 2025 as stipulated in the concession agreement after which there will be no renewal.”
Reports of Government not renewing UMEME’s concession were first disclosed by Opolot Okaasai, State Minister for Energy where he informed Parliament of plans not to renew UMEME’s current concession that was first signed in 2005 and slated to end in March 2025.
But the company has had an acrimonious relationship with both Government and the public, to the extent that in March 2018, President Museveni authored a letter warning the Ministry of Energy against renewing UMEME’s concession arguing that the country should be looking for cheaper ways of modernising and expanding the distribution and distribution lines, and also ordered an audit into UMEME’s purported losses.
His decision was informed by the 2017 audit report by the Auditor General, that indicated that Government lost approximately Shs129Bn to UMEME in depreciation and return on asset since Government entered into contract with the electricity company.
The report revealed that the depreciation cost and return on investment shot to Shs11.1Bn from 2004 to 2015, with the loss having increased to Shs13.6Billion after 2015, bringing the total loss to Shs129Billion.
However, it isn’t only UMEME’s concession that won’t be renewed but all the concessions under the electricity sector like Eskom whose concession is ending in 2023 won’t be renewed and other power generating companies.
According to the Ministry of Energy, UMEME’s will be replaced with the formation of one electricity company named Uganda National Electricity Company (UNEC), an indication to return to the monopoly of Uganda Electricity Board that was split up in 1999 to form; Electricity Regulatory Authority, Uganda Electricity Distribution Company, Uganda Electricity Transmission Company.
UMEME in its statement promised to remain committed to performing its obligations as per existing concession agreements writing, “ We will continue to operate and maintain the electricity distribution system in line with prudent utility practice to ensure continued service delivery through the end of the concession.”
