Umeme Says It’s Been Compelled to Hand Over Electricity Distribution; Considers Arbitration in London

Umeme insists that the government’s audit undervalues the company’s investment and has formally notified authorities of a dispute under Section 9.1 of the Support Agreement

Inside and outside the Ntinda substation in Kampala, where Umeme replaced obsolete power transformers and switchgear with new 33kV gear to address the quality of supply in the Ntinda area at a cost of USD2.1 million (Shs 7.8 billion)

LUGOGO, KAMPALA – Monday, March 31, 2025: Electricity distribution company Umeme Limited says it has been “compelled by the Government of Uganda” to hand over the national electricity distribution system today, even as it contests the government’s valuation of its buyout compensation.

In a public notice dated March 30, 2025, Umeme confirmed that it had received $118,385,603 from the Government of Uganda as the officially recognized Buyout Amount, as determined by the Office of the Auditor General (OAG). 

However, Umeme maintains that its original claim of $234 million, based on unrecovered infrastructure investments, remains valid.

“The Company has, without prejudice, invoiced for and received the Government’s admitted sum,” the notice reads. 

It also highlights that the OAG’s figure excludes an additional $9,785,298 still pending verification.

Umeme insists that the government’s audit undervalues the company’s investment and has formally notified authorities of a dispute under Section 9.1 of the Support Agreement. 

The company also signaled its intention to pursue arbitration, likely in London, should negotiations over the remaining sum fail.

“Umeme disputes, amongst several things, the audited figure in the OAG’s Report,” the notice reads, adding that the company is optimistic that the matter will either be resolved during the mandatory 30-day good faith negotiations period or, failing that, “by an arbitral tribunal in London.”

Uganda is a signatory to the International Centre for the Settlement of Investment Disputes (ICSID) convention. 

In the recent past, there have been several cases brought against Uganda at ICSID most especially in the oil and gas and infrastructure sectors. 

Compliance

Despite its objections, Umeme says it is complying with a directive from the government to transfer the electricity distribution system to the Uganda Electricity Distribution Company Limited (UEDCL) today, March 31. 

UEDCL will officially take over operations from April 1, 2025.

The notice comes amid heightened public scrutiny and concern about the transition from private to government-led electricity distribution, with some fearing potential service disruptions.

Umeme’s handover ends its 20-year concession, which officially expired on February 28, 2025. According to the Concession Agreements, the government was required to compensate Umeme for unrecovered investments, but the parties have sharply differed on the value of those investments.

The Board of Umeme says it remains “committed to ensuring an accurate and appropriate return for its shareholders” and is optimistic that pending disputes will be resolved amicably or through arbitration.

The situation sets the stage for a tense post-transition period, as the government moves forward with UEDCL at the helm of electricity distribution, while legal and financial wrangling over the final buyout figure looms in the background