Power distribution company Umeme confirmed on Thursday 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. The Company 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,” the power distributor said in the Thursday morning statement.
Umeme further 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 delivery through to the end of the concession.
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.
Part of the reasons for government to end the Umeme concession have been high electricity tariffs.
“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.
Whereas 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.