Gov’t On The Spot For Paying UMEME UGX428bn In Buyout Yet Same Company Owes UETCL UGX600bn!

The new upgraded Gulu substation

Government has come under fire for paying US$118Million (UGX428.990Bn) to UMEME Limited as buyout amount at the end of its concession in March 2025 yet the same company owes Uganda Electricity Transmission Company Limited (UETCL) UGX600Bn. Parliament’s Committee on Environment and Natural Resources, notes that the UGX600Bn arose from electricity UETCL supplied to Umeme.

This development came up during a meeting held between the Committee and Ministry of Energy, alongside the electricity companies on 8th October 2025 to discuss the status of the distribution and transmission networks, following several complaints about power blackouts in Uganda.

Patrick Aeku, the Soroti County MP, said: “How can we approve money to pay UMEME when you know that UMEME also owns a transmission company within government? I just want to make this clear with boldness that it is completely unacceptable. These people were paid, let them pay transmission (UETCL) their money. If they fail, there is nothing like a London court, UMEME is just here with us locally, when did they become an international company? Because as far as I know, for you to go to a London court, you must be an international company,” argued Aeku.

He further warned that the failure by Umeme to clear the UETCL debt would cripple service delivery in the country as UETCL will to execute its duties.

“Are we now saying that UMEME has suddenly changed to become international? You having shareholders who are international does not make you international. We operated with these people in the local space here. This is completely unacceptable. Tomorrow we are now going to have problems with UETCL, they are going to tell you we are not performing because of this debt. Now they may not be able to pay generation. Generation comes and says, but now we can’t generate; transmission (UETCL) has not paid us. Who are these directors of UMEME? They are here, let them come and give us the money, pay transmission, so that there is effective service delivery,” Aleku said.

This followed a revelation made by Sidronious Okaasai, Minister of State for Energy, who informed the Committee that the payments due to UETCL by Umeme, was to a tune of UGX450Bn, which amount excludes approximately UGX91Bn relating to the March 2025 invoices that will be paid by Umeme / UEDCL once the reconciliation of the energy sales and collected revenue are concluded between UEDCL and Umeme Limited.

Minister Okaasai added, “Further to this, there is about UGX150Bn that was held by Umeme Limited on account of arrears from Government MDAs. The matter of Umeme Arrears to UETCL is now before the London Court of Arbitration since Umeme claimed that this matter should be handled after the settlement of its dispute on the Buyout Amount, a position that Government did not agree to. This matter is now being spearheaded by the Ministry of Justice and Constitutional Affairs.”

However, Herbert Ariko (Soroti East), who doubles as Chairperson, Parliament’s Committee on Environment and Natural Resources, wondered why Government paid Umeme the buyout amount before Umeme paid up its share to UETCL, saying that the outstanding debt to UETCL has raised concerns on the operations of UEGCL as there is need to ensure that the company is at its best before Government implements the rationalisation policy. Government had earlier halted the merger of all the electricity companies; Uganda Electricity Generation Company Limited (UEGCL), Uganda Electricity Distribution Company Limited (UEDCL) and Uganda Electricity Transmission Company Limited (UETCL) into one company, Uganda Electricity Company.

“We don’t want transmission to join UEGCL when they are weak. So, one way or the other, all our companies must also receive what is due to them. To say that UMEME says they are not going to pay what is due to UETCL, because they dispute the amount paid to them as a buyout, and therefore the London Court of Arbitration should resolve that first, it comes back to indict us. Why didn’t we also behave like the way they have behaved? Because we could have also chosen to say, prior to you receiving the buyout amount, clear the obligations that are due to the Government, particularly your service provider, who provided you with power. Why is it that at this stage is when it must be subject to the decision of the London Court of Arbitration?” Ariko argued.

Engineer Pauline Irene Bateebe, Permanent Secretary, Ministry of Energy and Mineral Development admitted before the Committee that even before paying off Umeme’s buyout amount, Government was fully aware of what Umeme owed to UETCL at the time of exit of this concession at the end of March of this year, but the lease and assignment agreement with Umeme had clear conditions on how to treat issues of the assets and the buyout amount, while at the same time, UEGCL also had a specific agreement with Umeme in terms of power sales that equally had its conditions and thus, mixing the two regimes because of the contested amounts was not tenable legally.

“I know Chairman had indicated a strategy, why didn’t we do exactly the same of holding back until Umeme paid UEGCL. That was not going to be practical because payment of the buyout amount was a condition for asset transfer. So, if we hadn’t paid and on time, then Umeme would not have relinquished the assets for us to commence the operations. So, at that juncture, you don’t want to be in that contestation, you are working on keeping the lights on, that was very critical. So, it was a conditionality, and it was important that we clear the buyout amount for purposes of inheriting the assets and then under the two regimes, we proceed on issues of contested amounts,” Eng. Bateebe explained.

Her response however attracted more questions, with Ariko wondering why UETCL also didn’t file a counterclaim since it is a limited liability company which has a corporate personality and can sue or be sued, but Bateebe clarified that although Umeme had requested to have the buyout contested amount and the outstanding payment to UETCL, enjoined and handled together, the Attorney General, Kiwanuka Kiryowa guided that these are two different matters and as such, Government has proceeded for arbitration on those issues separately.

The Committee was further shocked to learn from both Eng. Richard Matsiko, Acting Chief Executive Officer, UETCL, and Chief Executive Officer, Electricity Regulatory Authority (ERA) Eng. Ziria Tibalwa that Umeme isn’t disputing the figures owed to UETCL, to which Eng. Bateebe added that Umeme has become a growing concern in Government and asked Parliament to summon the company to respond to all the questions raised about its operations.

Eng. Matsiko explained, “First, one thing to note is this whole disagreement between UETCL and Umeme is in a way unique because Umeme does not dispute the figure, the invoice. However, they are insisting, like the PS has brought it out clearly, to handle our issue with the buy-out issue, they are saying they are not drawing a line between government and UETCL and I think this is now what is taking us to the Court of Arbitration in London. We insist our issue should be separate from the buy-out, we have an agreement between ourselves, you should go ahead and honour, they are saying they will not draw a line, they want both handled together.”

Eng. Tibilwa explained that UETCL has initiated all the claim, issued the invoices in line with the Power Purchase Agreement and Umeme is not disputing the amount.

The Committee later agreed to summon Umeme to appear before Parliament alongside the Ministry of Energy and UETCL, although, David Karubanga (Kigorobya County) wondered if discussing the matter before the London Arbitration Court wouldn’t be subjudice, to which Ariko clarified that the subjudice rule only applies within the Ugandan jurisdiction.