- The $190 million loan from Stanbic Bank is to compensate Umeme Limited for unrecovered investments as its electricity distribution concession ends.
- Umeme, Uganda’s sole electricity distributor since 2005, was informed that its concession will not be renewed when it expires at the end of this month.
Uganda’s parliament has approved a government request to borrow $190 million from Stanbic Bank to compensate Umeme Limited for unrecovered investments as its electricity distribution concession ends.
The announcement was made by Energy Minister Ruth Nankabirwa, who confirmed the development in a post on social media platform X late Thursday.
“Parliament has approved our request as @GovUganda to borrow $190 million from Stanbic Bank for the buyout of Umeme,” Nankabirwa wrote.
Umeme, Uganda’s sole electricity distributor since 2005, was informed that its concession will not be renewed when it expires at the end of this month. The company, listed on the Uganda Securities Exchange and the Nairobi Securities Exchange, has been crucial in expanding Uganda’s power distribution network over the past two decades.
However, under the concession’s terms, the Ugandan government is legally obligated to compensate Umeme for capital investments in the country’s power infrastructure that the company did not fully recover before the concession’s expiration.
The approval of the $190 million loan is seen as a critical step in ensuring a smooth transition in Uganda’s electricity sector. The government has been preparing for the state-owned Uganda Electricity Distribution Company Limited (UEDCL) to take over Umeme’s operations, aligning with its policy shift toward greater public sector involvement in power distribution.
The compensation package will help maintain investor confidence by demonstrating the government’s commitment to honouring contractual obligations. This is particularly important as Uganda seeks to attract new investments in the energy sector to support its growing economy and increasing electricity demand.
With the financing now approved, the government is expected to proceed with finalising payments to Umeme, ensuring a seamless transfer of power distribution responsibilities. Officials have reassured the public that the transition will not disrupt the electricity supply and that efforts are underway to improve service delivery and expand access to electricity nationwide.
As Uganda shifts towards a government-led distribution model, stakeholders will closely watch how the transition unfolds and impacts electricity pricing, infrastructure development, and overall sector efficiency.