Kampala, Uganda – Uganda parliament has approved the $190 million acquisition of Umeme Limited’s concession in a key move marking the end of the era, effectively opening up ways for the government to have full control of the country’s electricity distribution.
The decision that comes after months of negotiations and deliberations has shown significant changes in Uganda’s energy sector and sparked widespread debate among stakeholders.
Umeme Limited, a publicly available energy distribution company, has been operating in Uganda since 2005 under a 20-year concession agreement with the government.
The company took over management of Uganda’s electricity distribution network from the state-owned Ugandan power distribution company Limited (UEDCL).
For many years, Umeme has played a pivotal role in improving the efficiency and reliability of power distribution across the country.
The company has invested heavily in infrastructure upgrades, reduced technical losses and increased access to electricity, particularly in rural areas.
However, concession agreements are the subject of controversy. Critics argue that the terms of the contract were at a disadvantage to the government, and while Muemé had earned great profits, the government was bearing the brunt of losses.
As the concessions approached its end on March 31, the government sought to take over its distribution network, leading to approval of a recent Parliamentary acquisition.
Regain energy control
With the $190 million acquisition approved by Congress, the government will acquire Umeme’s assets and take over management of its electricity distribution network.
The funds will be used to compensate Umeme’s investments and to facilitate a smooth transition to operations to the government. The decision to buy Umeme’s concessions is part of the government’s broader strategy to regain control over key utilities and infrastructure.
Supporters of the move argue that the government will be able to better coordinate electricity distribution with national development goals, particularly in rural electrification and industry growth.
Furthermore, it is expected that the government will no longer be obligated to pay concessions to private companies, thus reducing consumer electricity costs.
Supporters of the government’s decision, including some members of Congress and energy sector experts, welcomed it as a step in the right direction.
Critics and critics
They argue that government acquisitions will lead to a more equitable distribution of electricity in sector management and greater accountability.
“This is a historic moment for Uganda’s energy sector,” said Sarah Opendi, a member of the Parliamentary Committee on Natural Resources.
“By taking over Umeme’s concessions, the government can now focus on expanding access to electricity, particularly in underserved areas, ensuring that all Ugandans share the benefits of energy resources.”
However, critics raised concerns about the government’s ability to efficiently manage distribution networks. Some fear that this transition could lead to a decline in the quality of services, citing past experiences with state-run utilities. Others have questioned the financial implications of the acquisition, claiming that $190 million could have been spent more on other pressing countries’ priorities.
“While the intention to take over Umeme’s concessions is commendable, we must be careful,” said Dr. Fred Muhumuza, economist and energy policy analyst. “The government must demonstrate that it has the technical and management capabilities to effectively operate distribution networks, or else it risks reversing the profits made over the past 20 years.”
With Congressional approval secured, the focus shifted to implementing the acquisition. The government has assured stakeholders that the transition is seamless and that disruptions in electricity supply are minimal.
Plans are already underway to strengthen the capabilities of Ugandan power distribution company Limited (UEDCL), which will take over its distribution network. In the long term, the government is looking to leverage acquisitions to accelerate rural electrification programs and help industry growth. By managing distribution networks, the government wants to reduce electricity costs, attract more investors, and create jobs in the energy sector.
Sign up for the AllAfrica newsletter for free
Get the latest African news
success!
Almost finished…
You need to check your email address.
Follow the instructions in the email you sent to complete the process.
error!
There was a problem processing the submission. Please try again later.
Acquisition mismatch
In recent weeks, Ugandan government officials have issued conflicting statements regarding the amount of acquisition of electricity distributor Umeme Limited, causing confusion among stakeholders. Energy Minister Ruth Nankabilwa has announced that Congress has approved a $190 million loan from Stanbic Bank after the concessions expired at the end of March 2025.
However, the Energy Minister Sidronius Okasai said the estimated purchase price was $2 million as of February 24, 2025, according to a report submitted to the Auditor’s Office.
In addition to the inconsistencies, the Power Regulatory Authority (ERA) initially estimated the acquisition amount to $225.75 million in September 2023, but later revised it to $127.66 million in March 2025, based on additional investments made by Recoverys from end-user tariffs.
These various figures have sparked concern among legislators and encourage a call for a thorough audit to determine the exact amount of the acquisition.
