Company awarded Shs100m over unlawful power disconnection by Umeme

Kampala, Uganda | URN | The Court of Appeal has overturned a High Court decision dismissing a suit by Edroch Plastics Co. Limited against former electricity distributor Umeme over the unlawful disconnection and delayed restoration of power to its factory.

A panel of three justices ruled that the High Court had erred in finding that Umeme was justified in disconnecting the factory, which manufactures plastic hangers, following reports of electricity theft in the area.

Edroch Plastics had sued Umeme for breach of contract and negligence, arguing that the company unlawfully disconnected its electricity supply and subsequently failed to restore the three-phase power required to operate its machinery despite repeated requests.

The factory applied for electricity supply in 2007 and was subsequently connected. However, in July 2012, Umeme disconnected the factory and neighbouring premises following reports of electricity theft in the area.

Although electricity supply was later restored to the affected area after investigations identified those responsible for the theft, Edroch Plastics remained without power.

The company’s Managing Director, Noah Muwonge, testified that the factory had not been implicated in the electricity theft but remained without the three-phase supply necessary to operate its machinery until August 2013, despite repeated reminders to Umeme.

He said Umeme only restored the electricity supply in August 2013 after learning that the company had filed a suit against it. In 2018, High Court Judge Billy Kainamura dismissed the suit, finding that Umeme had lawfully disconnected the factory. Edroch Plastics subsequently appealed the decision.

In her lead judgment, Justice Esta Nambayo found that Umeme had acted negligently by failing to restore electricity to the factory despite repeated requests. She noted that Edroch Plastics had neither been identified as responsible for the theft nor charged with any related offence, adding that the evidence before the court did not establish the company’s involvement in electricity theft.

Justice Nambayo said the existence of electricity theft in an area did not justify disconnecting every consumer served by the affected power line, and consequently found that the High Court had erred in holding that Umeme was justified in disconnecting the factory.

The judge also faulted Umeme for failing to provide an adequate explanation for the prolonged interruption of electricity supply, which disrupted the factory’s operations.

She observed that the company’s failure to rectify the problem within a reasonable time, despite being notified, amounted to negligence and a breach of its contractual obligations. Justice Nambayo said the prolonged interruption had prevented Edroch Plastics from operating its machinery, resulting in business disruption and inconvenience.

The company had sought 276 million Shillings in damages for losses incurred during the year it remained without electricity. However, the Court of Appeal declined to award the full amount, noting that the claimed lost profits, damaged work in progress and other losses had not been sufficiently proved.

Instead, Justice Nambayo awarded the company 100 million Shillings in general damages, taking into account the duration of the interruption, the commercial purpose of the electricity supply, the inability to operate machinery and the repeated efforts to secure reconnection.

She said the award was intended to compensate the company for the substantial business disruption and inconvenience established by the evidence, rather than unproven financial losses. The judgment was concurred with by Justices Cheborion Barishaki and Musa Ssekaana.

Umeme’s electricity distribution concession expired last year, with Uganda Electricity Distribution Company Limited taking over the distribution of electricity.