The state-owned Uganda Electricity Distribution Company Ltd (UECDL) is set to take over power distribution early next week from Umeme Ltd.
- •Last week, the country’s legislature approved a government request to get a US$ 190 million loan from Stanbic Uganda to buyout Umeme.
- •In addition to the buyout costs, UECDL has also said it will inject another US$50 million into operations.
- •Umeme, which is cross listed on the Uganda Securities Exchange (USE) and the Nairobi Securities Exchange (NSE), could be delisted since the buyout will lead to the loss of its core business.
According to the concession terms, the company is going to be compensated for any investments it has not recouped when the concession runs out on Monday, March 31, 2025.
The buyout amount has fluctuated as the deadline looms: Umeme claimed US$231 million, the Energy ministry’s counter offered with US$191 million, and the Auditor-General made a preliminary estimate of US$201 million.
The Auditor-General and a parliamentary committee had opposed the government’s request to seek funds to buyout the company, asking for more time. The decision to approve the loan facility application was due to the stringent terms of the concession, which include a tight window for Uganda to audit the concession and pay the balance plus a premium.
Uganda’s National Social Security Fund (NSSF) is Umeme’s largest shareholder with a 23.20% stake. Other top shareholders include Allan Gray, Kimberlite Frontier, Utilico Emerging Markets, and Coronation Global Opportunities.
It is still unclear whether Umeme will be suspended from trading on the USE and the NSE once its concession ends and it hands over its core business to UECDL.
