March 1, 2005 – March 31, 2025: End of the Umeme era

Energy Minister Nankabirwa promises to have a smooth handover, resolve Umeme buy out

Kampala, Uganda | THE INDEPENDENT & URN |  Umeme Limited on Monday finally relinquished assets and the control of electricity distribution in the country.

Electricity distribution was reverted to Uganda Electricity Distribution Company Limited (UECDL) under the concession that has been running from 1st March 2005 and elapsed at midnight of 31st March 2005.

The handover of what has been described as big switch was witnessed by the Energy and Mineral Development Minister, Ruth Nankabirwa, State Minister for Energy, Sidronius Okaasai Opolot, other technocrats at the Minister and the Electricity Regulatory Authority led by Engineer, Ziria Tibalwa Waako.

To many who spoke at the handover,  Umeme Limited will have an indelible mark on Uganda’s electricity distribution network despite recent public outcry about the buyout amount claimed as the 20-year concession came to the end.

Selestino Babungi, who has been the Managing Director at Umeme for over a decade in trying to sum the transformation the company has overseen in the last twenty years, said the company was in 2005 given a very small switch. “Now we are giving back a very massive big switch,“ he said.

Babungi said they have tried to address most of the challenges that existed before it was awarded the 20-year concession. These, he said included connectivity, challenge in terms of efficiency, connectivity of people to electricity and limited technical capacity the electrical supply industry among others.

“And the whole sector was deemed not commercially viable. That led to the past reforms made twenty years ago,” he said.

What has Umeme Left Behind?

Babungi said when Umeme was handed the concession, the government was seeking for the private sector to invest in struggling power distribution network. He said cumulatively, over $850 million was invested in the sector.

“The network has more than doubled. You handed over 5,000 transformer zones, we are giving back 17,0000 zones, 34000 kilometers of lines. You gave me a quarter a million customers. I’m giving you nine times that…2.2 million customers” Babungi reported.

He also highlighted energy loss reduction by Umeme as one of the key millstones.

“We may take it lightly but this eats into the financial viability of the sector. In the past we had 35% energy losses, we are handing over 16%.”

In financial terms, Babungi said the distribution network was in 2005 generating sh160 billion but that the sector is currently generating sh2.5 trillion.

“‘It is a $700 million revenue business growing at an average of 10%. That is what we are handing over and we believe that should be protected because it can attract investments upstream, downstream and in generation,” he suggested.

“What is very important is that we see some sectors grow in the negative. We are selling five times volume power compared to the previous time when we started.”

Is the network falling apart? 

Babunji denied that the network is falling apart but it is carrying 70% more power than five years ago.  There have been suggestions that Umeme is exiting the market when the network is falling apart. Some have suggested that the disruptions or power outages because of asset stripped.

“We are loading the network with a lot of power without opening the arteries to carry that power. That is the challenge we are facing” he explained.

Babungi said Umeme has in the last 20 years built a foundation in the power distribution in which the next operator should build on.

“My biggest challenge is the rate at which power is being demanded. If we don’t do anything in the next three years, we will run out of power,” he warned.

Umeme Limited Board Chairperson, Patrick Bitature said there is still a bit of work to do in terms of negotiating the buyout amount as the concession ends.

“Some people feel that the negotiations have got to continue. Yes they are going to continue,” he said.

“And I need to assure my shareholders. That buy out amount is not what they expected. But that is an issue for another day.”

The government paid Umeme Limited $120 million last week but Umeme claims it is owed $234m. Umeme has a contractual obligation to support Uganda Electricity Distribution Company Limited (UEDCL) during the next six months.

Change of guard Umeme Staff change uniform

Come Thursday 1st April, power consumers are likely to see most of the former employees of Umeme back into their offices save the color of uniforms.

Uganda Electricity Distribution Company Limited Managing Director, Paul Mwesigwa said all the jobs outlined in the new structure as approved by the ministry of Energy have been filled by former Umeme employees.

“We believe we have the best team to take on the mantle and the exercise” he said. He revealed that 2,710,000 former employees of Umeme Limited have been absorbed in by UECDL.

“We are still remaining with eleven positions that we are trying to manage. But we believe that by the end of business today, we shall be in position to conclude that from the team” said Mwesigwa whose company has just received $74 million to carry on the new mandate.

He said all the assets of Umeme have been audited and registered in UECDL’s accounts.

We Shall Resolve Umeme Buy Out-Nankabirwa

The government through a loan from Stanbic Bank paid Umeme $118 million.  While Umeme agreed handover to the government, it disagrees with the among and therefore is asking for more than the cost verified by the Auditor General

Speaking at the Umeme Limited asset handover to the Uganda Electricity Distribution Company Limited (UEDCL) at Lugogo on Monday, The Minister of Energy and Mineral Development, Ruth Nankabirwa said that the amount paid to the power distributor was an estimate because the concession was still running by the time it was computed.

Nankabirwa added that the Auditor General had to provide a provisional figure to enable her ministry to make request to the Ministry of Finance for a loan of 190 million US Dollars.

According to Nankabirwa, there will be a harmonization period between Umeme and the government starting on April 1st.

“In the Auditor General’s report, it was very clear that the figure given was not the conclusive one because there is work that Umeme is still doing,” Nankabirwa remarked.

She also mentioned that, according to the Auditor General’s report, the government was allowed to pay 118 million US Dollars while also planning to pay for incomplete Umeme work amounting to 9.78 million US Dollars, which the government recognizes as a liability to be cleared.

#UEDCLUpdate:#TheBigSwitch ceremony was graced by Canon Dr. @NankabirwaRS, @HonOkaasai & @irenebateebe. They were flanked by ESI Principals @WasagaliSarah @ERA_CEO1 @UEDCLMD @MDofUmeme & other dignitaries outside ESI. The ceremony was streamed live on @ubctvuganda & @nbstv. S.C.A pic.twitter.com/Y6g9UbPlaW

— UEDCL (@UEDCLTD) March 31, 2025

We extend our best wishes to Uganda Electricity Distribution Company Limited (@UEDCLTD ) as they embark on this new journey of serving customers across the country. It has been our privilege to serve Ugandans for the past two decades, and we deeply appreciate the unwavering… pic.twitter.com/FFAAyoos3u

— Umeme Limited (@UmemeLtd) March 31, 2025

She added that there is a need to conclude the Umeme concession naturally because it is not a termination but the natural end of an agreement.

Umeme Limited issued a memo on social media saying that it expects  234 million US Dollars as opposed to $118 million it received from the government last week. URN has learnt that while Umeme Limited has made public statements in the media, it was yet to launch a formal claim for the balance of money.

Under the concession, Umeme is allowed 14 days within which to study the decision of the government and then determine to accept or refuse buyout sum. Umeme Managing Director, Babungi confirmed to URN that they yet to lodge a formal objection to the amount paid by the government.

The difference between what the government has been and what Umeme is demanding is as a result on the ongoing repair at Gaba and Mukono substations among others.

Meanwhile, Dr. Sarah Wasagali Kanabi, the Board Chairperson of the Electricity Regulatory Authority (ERA), said that the authority has approved the end-user tariffs effective from April to June 2025, starting at midnight.

Wasagali mentioned that with the new tariffs, ERA expects demand to grow at an annual rate of 10.4 percent this year. She also said that the quarterly tariff adjustment methodology implemented since 2014 will continue to be in effect in 2025.

Additionally, Wasagali stated that ERA will continue to implement measures to reduce electricity end-user tariffs for manufacturers and continue with the declining block tariff structure for large industrial manufacturing customers for the tariff year 2025.

In a bid to encourage domestic users to cook using electricity, there will be a continued implementation of the domestic cooking tariff of sh412 per unit for between 81 and 150 units consumed monthly.

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