HIGH ELECTRICITY TARRIFS PUTS UMEME AT EXIT POINT
Dailywestnile.info can confirm that Uganda's top most Power distribution company Umeme is set to exit and handover all its legal operation rights to the government of Uganda as of March 2025. This is Based on the official press release by the company dated 8/12/2022.
In a copy of the Concession Press Release issued to dailywestnile.info by the UMEME in which the Power distribution company UMEME confirmed that they will exit Uganda in 2025 after they received notice from government that their 20-year concession will not be renewed upon expiry.“The concession is enshrined in several binding Concession Agreements. Which reads
Official Press Statement From UMEME
UMEME noted that it remains committed to performing its 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
However, Mr. Solomon Muyita, the communications manager at the Energy Ministry said government is planning to name a multi-sectoral committee that shall oversee the auditing process of Umeme's investments and assets.
Mr. Solomon Muyita - communications manager at the Energy Ministry
As Part of the reasons for government to end the Umeme concession have been high electricity tariffs over the years despite the country's efforts to having more electricity generation plans.
"Government decided to bundle electricity agencies which are is the context of forming one company that will provide cheaper electricity," Mr Muyita said.
According to him, Umeme will be solely responsible in dealing with its public shareholders whose shares are held on the Uganda Securities Exchange.
Umeme’s investmentsWhereas Umeme’s total investments made since 2005—as of December 2021—stood at $547.5m with a recovery of $331.94m, the government has indicated that it will not renew the concession Umeme was granted in 2005.
This is in spite of the financial feats the power distributor has tucked under its belt. 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 percent. This followed a spike in energy sales and a drop in its operational costs.
For the first six months of this year ending June 30, Umeme’s pretax profits rose to Shs92.8 billion compared to Shs69.6 billion recorded in the same period last year. It also said the steep rise in profits was largely on account of higher electricity sales that rose nine percent year-on-year and a 6.5 percent drop in operating costs driven by a reorganization of the business and efficiency gains from investment in technology.
Key to note is that Uganda Electricity Distribution Company Limited (UEDCL) is the government entity on whose behalf Umeme Ltd runs the electricity distribution infrastructure. Mr Paul Mwesigwa, the UEDCL managing director, told this publication last month that the company has built a specialized capacity to manage electricity distribution.
Mr. Paul Mwesigwa - UEDCL - MD
Mr Mwesigwa also said 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, Moroto, etc.
In 2013, the government commissioned the Rural Electrification Programme, under the Ministry of Energy, to extend electrical power to hard-to-reach areas. UEDCL was then assigned the responsibility to develop and manage the network.
Editors Peak: CC UMEME Media Dept & Nation Media
