With less than 10 days to the April 1, 2025 takeover of electricity distribution from Umeme Limited, concerns are mounting over the government’s readiness to assume control through the Uganda Electricity Distribution Company Limited (UEDCL). The Ministry of Finance is in advanced stages of securing USD 50 million through internal borrowing to facilitate UEDCL’s initial investment. However, the funds are yet to be disbursed, raising doubts about whether the transition will be smooth.
Government’s Readiness in Question
During a parliamentary session on Tuesday, Electricity Regulatory Authority (ERA) CEO Eng. Ziria Tibalwa Waako warned that delays in securing the necessary funds could hinder UEDCL’s ability to take over Umeme’s operations effectively. “On our side, we aren’t even ready with the USD 50 million for UEDCL to start, let alone the concession agreement wouldn’t allow UEDCL to step in. This is a learning process for the government… UEDCL should have started working hand in hand with Umeme long before the concession agreement expired,” Waako stated.
Despite these concerns, the Ministry of Energy and Mineral Development insists that the transition is on track. In a statement issued Wednesday, the ministry reaffirmed: “The Government is fully prepared to take over the electricity distribution concession from Umeme Ltd through UEDCL on April 1, 2025. The Ministry of Finance is in advanced stages of securing USD 50 million to support UEDCL’s capital investments, which will be available by the end of next week.”
Why Is Umeme Leaving?
In 2022, the government decided not to renew UMEME’s 20-year concession, citing high electricity tariffs and the need to nationalize power distribution. UEDCL, a government-owned entity, will now take over operations.
However, under the concession terms, UMEME must be compensated for its unrecovered capital investments. The government plans to borrow USD 190 million (UGX 696.6 billion) to finance the buyout, despite concerns over Uganda’s growing public debt.
Failure to pay UMEME by February 2025 would trigger a 10% interest penalty, rising to 15% if delayed between 46 and 90 days, and 20% beyond 91 days, according to the Ministry of Finance.
Last-Minute Investments and Power Outages.
Despite its looming exit, Umeme is still investing in the power distribution network to meet its obligations under the concession agreement. Eng. Waako defended UMEME’s continued spending, citing recent major outages: “If today Parliament is off and a transformer is blown, do you wait for April 2025 when UEDCL is here? In the last month alone, we have had serious outages, vandalism, and network failures. If UMEME did nothing, we would be stuck.”
Job Losses Expected After Takeover.
Energy Minister Ruth Nankabirwa confirmed that some Umeme employees will lose their jobs after UEDCL takes over, citing efforts to avoid duplication and enhance efficiency. “We have to make savings. Where a role already exists within UEDCL, we cannot hire someone from Umeme to do the same job. Unfortunately, some workers will not be retained,” Nankabirwa explained.
As the April 1 deadline approaches, uncertainty looms over the transition, with funding delays and operational challenges threatening to disrupt power distribution across Uganda.
