Power distributor, Umeme has said the Ugandan government has compelled it to hand over control of the national electricity distribution system today, despite an ongoing dispute over its buyout compensation.
The Office of the Auditor General recently submitted a report to Parliament, valuing Umeme’s buyout compensation at $118,385,603.
However, in a public notice on Monday, Umeme contested this assessment, arguing that it significantly undervalues its investment and maintaining that it is entitled to $234 million.
“The company has, without prejudice, invoiced for and received the government’s admitted sum,” the notice states.
Umeme also pointed out that an additional $9,785,298 remains pending verification.
While acknowledging receipt of the government’s payment, Umeme has formally challenged the valuation, citing discrepancies in the OAG’s assessment.
The company has invoked Section 9.1 of the Support Agreement, signaling its dissatisfaction and setting the stage for a potential legal battle.
“Umeme disputes, amongst several things, the audited figure in the OAG’s Report,” the notice reads.
The company has expressed hope that the issue will be resolved within the mandatory 30-day negotiation period. However, if discussions fail, Umeme has indicated it will seek arbitration, likely in London.
Uganda, a signatory to the International Centre for the Settlement of Investment Disputes (ICSID) convention, has faced similar arbitration cases in the past, particularly in the oil, gas, and infrastructure sectors.
Despite its objections, Umeme has complied with the government’s directive to transfer operations to UEDCL, marking the end of its 20-year concession, which officially expired on February 28, 2025. UEDCL is set to take full control of electricity distribution starting April 1, 2025.
In a public notice dated March 30, 2025, Umeme confirmed that it had handed over the system to the Uganda Electricity Distribution Company Limited (UEDCL) as directed by the government, despite ongoing disagreements over the valuation of its unrecovered infrastructure investments.
The transition has sparked public debate, with concerns over potential service disruptions as the government takes over from the private sector.
Meanwhile, Umeme’s Board maintains that it remains “committed to ensuring an accurate and appropriate return for its shareholders” and is optimistic that any outstanding disputes will be settled amicably or through arbitration.
With the handover now complete, the dispute over compensation remains unresolved, setting the stage for a tense post-transition period as both sides brace for what could be a lengthy legal battle.
