UEDCL to take over Umeme staff as it exits Uganda in 2025

UGANDA | UMEME STAFF | UEDCL 

Come March 30th, 2025, Uganda’s electricity distribution sector will change face with the exit of Umeme.

On that day, the candle of Umeme Ltd, Uganda’s power distributor which holds a 20-year concession from the government, would have burnt out.

For several months, Umeme had distanced itself from widespread speculation that the Government has made a final decision not to renew its concession once it expires.

Umeme has now come out and formally pronounced itself on the status of the 20-year concession it had with the Uganda Government to run the distribution system up to 2025.

“Umeme has formally received written communication from the Government of the Republic of Uganda, notifying it that the current concession will continue to run until its natural end in March 2025 as stipulated in the concession agreements after which, there will be no renewal,” reads part of the recent statement.

Umeme’s remarks come after the minister of state for Energy, Okasai Opolot said Umeme’s fate was sealed in a recent cabinet meeting, ending years of speculation on the Government’s renewal of the concession. Okasai had earlier said that Government was preparing the Uganda Electricity Distribution Company Ltd to take over power distribution.

The government had entered into protracted negotiations with Umeme to compel it to revise downwards its return on investment, (ROI) which stood at 20 percent.

President Museveni, way back in 2018, had called for the halt of the extension of the power distributor’s concession on the premise that terms such as return on investment had continued to be high thus affecting the electricity tariff.

Umeme however promised to run the last mile in the ongoing concession.

“We remain committed to performing our obligations as per the existing concession agreements and will continue to operate and maintain the electricity distribution system in line with prudent utility practice to ensure continued service delivery through to the end of the concession,” reads part of a statement issued by Peter Kaujju, the Umeme publicist.

Kaujju said that under rule 36 (1) (a) and (b) of the Uganda Securities Exchange (USE) Listing Rules 2021, the company is required to amongst others disclose to its shareholders and the general public new developments in its sphere of activities which are not public knowledge and which may lead to material movements in the ruling price of its listed securities.

When Umeme finally leaves, UEDCL, which is the government entity on whose behalf Umeme Ltd has been running the electricity distribution infrastructure, is expected to immediately take over.

UEDCL, which has for a decade been running an electricity distribution business in areas where Umeme did not reach, would be faced with an uphill task of meeting the expectations of Ugandan power consumers, who still have vivid memories of the Uganda Electricity Board (UEB), which almost run down the network.

The company has since 2013 successfully operated in more than 74 districts that Umeme found not to be commercially viable such as Kyenjojo, Kagadi, Moyo, Adjumani, Nakapiripirit, and Moroto.

UEDCL has also been monitoring, on behalf of the government, the distribution network investment run by Umeme.

Paul Mwesigwa, the UEDCL managing director, says the company has over the years built a specialized capacity to manage electricity distribution.

He says they have a full-fledged technical department, headed by engineers with experience in managing network activities and planning for the network including connectivity across the country.

While UEDCL, currently runs its business with at least 380 manpower base, When Umeme finally leaves, they would be faced with the task of absorbing the latter’s staff, a thing Mwesigwa says they are in a position to do.

Meanwhile, hiring private companies has largely been blamed for the high cost of power and unstable supply. Several pundits have called upon the Government not to renew the concession.

Dickens Kamugisha, the Chief Executive Officer of the Africa Institute for Energy Governance-AFIEGO, recently said value for money was lacking in the concession, adding that Government shouldn’t just bring in the private sector for the sake of it.

“There is a need for Government to do a forensic study of all the companies and agencies in the energy sector to have their performances over the years scrutinized against their terms of references,” he was quoted in the media as saying.

John Walugembe, the executive director, of the Federation of small and medium-sized enterprises (FSME), said that the current tariff structure is not in favor of small businesses and works in opposition to Government’s industrialization campaign.

“As things stand now, electricity forms a big component of operational costs to industrialists. The high tariff has made companies breed for years.

Charles Ocici, Enterprise Uganda’s executive director said that the exit of a company that was a monopoly and taking over the business of a Government monopoly [UEB] is no small feat.

“Government would need to assure the public that UEDCL managers are going to steer away from bureaucracies and offer a good service. All consumers care about is the cost of power and efficiency – not the name of the manager or their political affiliation,” he said in an interview yesterday.

Solomon Muyita, the Energy ministry’s spokesman, said a follow-up Cabinet meeting will be held to discuss the transition process and takeover of Umeme’s assets.

He said that an ensuing committee will be put in place will oversee how the transition should proceed as well as audit Umeme’s investments and payouts that have to be made.

The government recently took over Namanve thermal power plant which was being run by Jacobsen under a 20-year concession and has vowed not to renew the Escom concession to run Kiira and Nalubaale power dams beyond 2023.

Whereas Umeme’s total investments made since 2005, as of December 2021, stood at $547.5m with a recovery of $331.94m, the government had vowed not to renew the concession Umeme was granted in 2005.

Umeme’s investment and turnover have grown over the years. In August, for example, it revealed that its half-year pretax profit by June had jumped to 33%.

For the first six months of this year ending June 30, Umeme’s pretax profits rose to sh92.8b compared to sh69.6b recorded in the same period last year.