The Ugandan government will later today seek parliament’s approval to borrow shs700 billion($190 million) from Stanbic Bank to facilitate the buyout of Umeme Limited whose concession agreement expires on March 31, 2025.
UMEME’s 20-year concession agreement, signed in 2005, is set to expire in March 2025 and to this, Uganda Electricity Distribution Company Limited (UEDCL) will take over the management and distribution of electricity.
Under the terms of the original agreement, the government is required to compensate UMEME for its investments in the electricity sector.
Cabinet recently gave the green light to the government to borrow the shs700 billion to fund the buyout.
According to the order paper released by parliament, today, the government will through the Ministry of Finance table before the August House, a proposal in which it seeks approval to borrow the amount from Stanbic Bank.
During the session, the government is expected to explain to lawmakers, the economic implications of the loan and its repayment terms.
The expiry of Umeme’s concession will give the government full control of the power distribution system, marking the end of a long-standing private sector arrangement.
In December last year, the Ministry of Energy and Mineral Development officially handed over two licences to UEDCL to distribute and sell electricity in the country, replacing Umeme.
By the time UEDCL takes over, Uganda will have a generation capacity of 2,052.6 megawatts, up from about 300 when Umeme got the concession.
