Uganda is considering listing power companies to enable them access more capital, seeking to emulate the success of listed Kenyan power generation company KENGEN.
- •According to Minister for Energy and Mineral Development Ruth Nankabirwa, listing would help the companies access sustainable financing for their capital intensive projects.
- •Uganda has more than 40 power generators, a single transmission company called the Uganda Electricity Transmission Company (UETCL), and nine distributors.
- •Umeme Ltd, the main distributor in the country, is currently listed on the Uganda Securities Exchange and cross listed on the Nairobi Securities Exchange (NSE).
“We are thinking about letting you be companies that can borrow money and invest here,” Min. Nankabirwa said during a recent event with power companies, “KENGEN is even paying back and sharing dividends with the government.”
According to Nankabirwa, the energy ministry is in talks with the finance ministry about the possible listings on the USE and has already sent a team to benchmark with KENGEN. KENGEN, which was separated from KPLC during sector reforms in the late 1990s, was listed on the NSE through an IPO in 2006. It has an installed generation capacity of 1, 904MW, 86% of which is from renewable sources.
In Uganda, power generation companies include publicly-owned entities, private entities, and public-private partnerships. In 2021, the publicly-owned Uganda Electricity Generation Company Ltd (UEGCL), which generates more than two thirds of the country’s power, disclosed plans to list on the USE within two years. In its latest strategic plan, the company said it would create distinct business units for each of its power generating facilities and allow them to run as subsidiaries as part of its plans to go public.
The Ugandan government is also a major shareholder in the Bujagali hydropower plant, which is set to be restructured in a deal that will see TotalEnergies own 28.3% of the company in an ongoing acquisition.
Umeme’s Future
Umeme’s 20-year concession will expire in March 2025, after the government decided not to renew it. Kampala plans to create a public-private partnership to take over the power distribution company’s assets and operations, through the Uganda Electricity Distribution Company Limited (UEDCL).
Umeme has been pivotal to the growth of power distribution network and customer numbers, from just 200, 000 in 2005 to two million today. It has invested $832 million in its distribution network and operations, and was listed on both bourses in 2012. It is one of the most traded counter on the USE, and the likelihood of its delisting once the concession expires has the bourse in a bind.
Uganda plans to compensate the company’s private shareholders for unrecovered capital investments, plus a five percent premium, once the concession ends. Unrecovered capital investments stood at $339million by the end of December 2023, and the figure is projected to fall to $225-$283 million by March 2025.
The concession terms include a tight schedule for the government to audit the buyout statement and pay the amount plus premium in cash.
