Uganda estimates it will pay Umeme $225 million when its power concession ends

KAMPALA (Reuters) – Uganda estimates it will pay power distributor Umeme Limited about $225 million to allow the utility to recoup its investments in the national grid after its concession ends in March 2025, a top energy ministry official said.

Umeme, which is listed on both Uganda and the neighbouring Kenyan bourses, has been running a 20-year power concession in Uganda that started in 2005.

The Ugandan government declined the firm’s request to extend its concession when it ends next year. The concession’s terms require the government to pay Umeme all unrecovered capital investments when the agreement ends.

“Today we do have an idea of how much the buy-out amount is … approximately we are in the tune of about $225 million,” Irene Batebe, the permanent secretary for the ministry of energy and mineral development told private broadcaster NTV Uganda late on Wednesday night.

It was the first time the government was signalling how much Umeme was likely to earn in unrecouped investments.

Batebe added the government’s auditor general would do a final review of Umeme’s investments in the national power grid to determine a final amount to be paid out to the firm.

The government also plans to contract a private company for a joint venture with the state-owned Uganda Electricity Distribution Company Limited (UEDCL) to operate the grid after Umeme’s concession ends, Batebe said.

Procurement of the private sector operator would be a competitive process, and UEDCL would retain majority shareholding in the partnership, she said.

Uganda has an estimated power generation capacity of about 1,400 megawatts.

(Reporting by Elias Biryabarema; Editing by George Obulutsa and Muralikumar Anantharaman)