Umeme Limited, Uganda’s largest electricity distributor, has formally declared a dispute with the Government of Uganda regarding the buyout amount owed at the end of its 20-year concession. The disagreement centers on the stark contrast between Umeme’s own valuation and that of the government, raising concerns about transparency, investor confidence, and the future of public-private partnerships in Uganda’s energy sector.
Background of the Concession
In 2005, the Government of Uganda entered into a 20-year electricity distribution concession with Umeme Limited. Under the agreement, the former electricity distributor was mandated to manage and operate the electricity distribution network while making capital investments aimed at improving infrastructure and service delivery. Over the course of the concession, the company claims to have invested over $600 million in network upgrades and reforms.
Handover, Buyout and Compensation Dispute
On March 31, 2025, Umeme officially handed over the national electricity distribution network to Uganda Electricity Distribution Company Limited (UEDCL), marking the end of the concession. As part of the contractual agreement, the government is required to compensate Umeme for any unrecouped investments made during the concession period.
However, a significant disagreement has emerged over the value of this compensation. Umeme has pegged the buyout amount at $234 million, citing unrecovered capital expenditures. In contrast, a government-commissioned audit by the Auditor General concluded that only $118 million is due—a figure that has since been officially adopted by the Ministry of Energy.
Formal Dispute Declaration
On April 11, Umeme issued a Notice of Dispute to the Ministry of Finance, initiating a 30-day negotiation window in accordance with Clause 9 of the 2005 Support Agreement. This clause provides for a formal negotiation period, after which either party may escalate the matter to international arbitration should a resolution not be reached.
In a public statement issued on April 14, the Umeme Board confirmed the dispute and advised shareholders and investors to exercise caution when dealing with the company’s securities until the matter is resolved.
Government’s Position
Energy Minister Ruth Nankabirwa has reiterated the government’s commitment to the Auditor General’s findings, affirming that $118 million is the final figure the state is prepared to honor. She emphasized that the government’s position is backed by independent audit verification and is consistent with public accountability standards.
What’s at Stake
At the heart of the dispute is the interpretation of the concession terms—specifically, whether the government has fulfilled its obligation to fairly compensate Umeme for outstanding investments. The company argues that the Auditor General’s valuation underrepresents the true scale of its capital expenditure and falls short of the contractual expectations laid out in 2005.
If negotiations do not lead to a resolution by May 11, the case is likely to proceed to international arbitration in London, a process intended to ensure impartial adjudication in such commercial disputes.
Impact on Investors and the Sector
The unresolved dispute has created uncertainty among investors, casting a shadow over what had previously been portrayed as a smooth transition to state-managed electricity distribution. It has also raised broader questions about the government’s handling of private sector partnerships and its commitment to honoring long-term contractual obligations.
Umeme’s role in Uganda’s energy sector was instrumental in modernizing the grid and improving service reliability. The outcome of this dispute may influence future investor appetite for similar infrastructure projects across the country.
Conclusion
As the 30-day negotiation period unfolds, the nation watches closely to see whether an amicable settlement can be reached. The Umeme dispute underscores the importance of clear, enforceable agreements in public-private ventures—and the need for fair, transparent mechanisms to resolve differences when they arise.
