Umeme Limited has formally declared a dispute with the government over the buyout amount owed at the end of its 20-year electricity distribution concession, citing a sharp discrepancy between its own valuation and that of the Auditor General.
In a public notice issued on April 14, the company confirmed it had served a formal Notice of Dispute to the Ministry of Finance on April 11, triggering a 30-day negotiation period as provided for under the 2005 Support Agreement.
“The Board of Directors of Umeme Limited wishes to inform shareholders and the investing public that the Company formally declared a dispute regarding the Buy Out Amount payable to the Company by the Government of Uganda,” the statement reads.
It adds that the dispute arises from the Government’s failure to agree with the company on the buyout figure, which remains due following the official handover of the distribution network to Uganda Electricity Distribution Company Limited (UEDCL) on March 31.
Umeme’s declaration follows months of back-and-forth over the buyout calculation.The company submitted an estimate of $234 million for unrecouped investments, but the Government commissioned a special audit by the Auditor General, whose final report pegged the amount at $118 million (about Shs430 billion).
The Energy Ministry subsequently adopted the Auditor General’s figure, dismissing Umeme’s earlier submission and even a previously considered estimate of $190 million (about Shs700 billion).
Energy Minister Ruth Nankabirwa reaffirmed the government’s position in public remarks, stating, “The Auditor General has audited and determined $118 million as the buyout amount.”
The dispute now centres on whether the Government has fulfilled its obligations under the concession agreement, which binds it to compensate Umeme for investments that were not fully recovered during the 20-year term.
Umeme maintains that the $118 million valuation underrepresents its capital expenditure and violates the terms agreed upon in 2005.
Clause 9 of the Support Agreement allows either party to trigger international arbitration if negotiations fail to resolve a declared dispute.
The two sides now have 30 days—until May 11—to reach a settlement, failing which the matter will proceed to arbitration in London.
The dispute clause was designed to guarantee impartial resolution in such cases, a measure both parties have previously agreed to honour.
The standoff has unsettled investor sentiment, with Umeme urging caution in the trading of its shares.
“Shareholders and investors are advised to exercise caution when dealing in the Company’s securities until the outcome of the Dispute is known,” the board warned in its public notice.
The dispute also casts a shadow over what had been presented as a seamless transition from private to public electricity distribution.
While the Government has lauded the UEDCL takeover as a step toward lowering electricity costs and restoring full control of the grid, the unresolved buyout claim raises questions about transparency, investor protection, and Uganda’s handling of public-private infrastructure partnerships.
Umeme’s handover marked the end of a concession that began in 2005 and saw the company invest more than $600 million in network upgrades and distribution reforms.
Although the infrastructure has since been transferred to the State, the dispute over its value—and who will ultimately pay—remains unsettled.
