KARUMA CASH CRISIS! UEGCL Profits Drop, Debt Soars to 81.6% as Power Plants Rot —Who is Sleeping on the Job?

Eleven years at the helm. Billions borrowed. Mega dams commissioned with pomp and glory. Yet today, hard questions are exploding over the management of Uganda Electricity Generation Company Limited as the December 2025 Auditor General’s report exposes troubling cracks in Uganda’s power generation giant.

At the center of the storm is Harrison Mutikanga, CEO for the last 11 years. Alongside him is Board Chairperson Eng. Proscovia Margaret Njuki. Together, they preside over the company that operates the country’s flagship hydropower plants — including the multi-billion-dollar Karuma and Isimba dams financed by loans from China’s EXIM Bank. But as profits dip, debt balloons and turbines spin below capacity, the question on many lips is blunt: are the top bosses still up to the task?

RedPepper understands a war to succeed Mutikanga has reached boiling point, but this is a story for another day. The likes of Eng. Isaac Arinaitwe, Chief Projects Officer, Susan Taffumba Isubikalu, Chief Finance Officer, and David Kahwa Isingoma, Chief Strategy and Business Development Officer, are said to be closely watching developments at the top. Eng. George Tusingwire Mutetweka, Chief Operations Officer is also peeping. These have reportedly confided in friends that they feel Mutikanga has outlived his usefulness at UEGCL and needs to pack his bags, arguing privately that “the CEO is past his sale date.”

On paper, UEGCL remains profitable. The company posted a profit of UGX 25.018 billion in FY 2024/2025. But that figure hides a sharp decline from the previous year’s UGX 54.282 billion. The drop was primarily attributed to the underutilization of the Karuma Hydropower Plant due to low national demand.

In other words, Uganda built a 600MW giant — and it is barely roaring.

A review of operations shows that Karuma Hydropower Plant, with a declared available capacity of 2,652GWh, dispatched only 808.27GWh, operating at just 30 percent capacity. That leaves a staggering 1,844GWh underutilization gap. In its first year, Karuma operated at an average of 70MWh and 116MWh in the second year — far below the minimum required dispatch of 300MW/h needed to identify and address latent defects during the defects liability period.

The result? The company realized only UGX 148.16 billion, representing 46.8 percent of the expected UGX 316.42 billion in revenue. The Auditor General warns that in these circumstances, the company might not meet loan and interest repayment terms, operational and maintenance costs, or adequately identify defects before the expiry of the defects liability period.

Management attributed the low dispatch to inadequate demand and prioritization of low-cost generating plants and private producers on capacity charge. The Accounting Officer explained that UEGCL engaged key stakeholders extensively and it was resolved that the company should continue billing energy and remit collected revenue to the Treasury, with any shortfalls in loan obligations for Karuma and Isimba covered by government rather than applying capacity-based billing prescribed in the Power Purchase Agreements.

But critics are not impressed. “How do you borrow billions of dollars to build a dam and then operate it at 30 percent?” one energy sector observer asked. “This is not just about demand. It is about planning, coordination and leadership.”

Debt levels are equally alarming. UEGCL’s debt ratio stands at 81.6 percent, well above the 50 percent threshold considered safe. Although this is a slight decline from 88.7 percent in the previous year — largely due to conversion of UGX 566.355 billion Karuma on-lent loans to equity — the figure still raises serious concerns about financial stability and future borrowing capacity.

The Auditor General noted that both UEGCL and UETCL had debt ratios above 50 percent, attributing the situation to inadequate funding to repay outstanding loan obligations. Management insists that actions are underway in collaboration with the Ministry of Finance to pursue debt restructuring options and revenue optimization initiatives through improved plant availability and enhanced efficiency. But with Karuma limping and Isimba facing structural concerns, time may not be on their side.

At Isimba Hydropower Plant, the spillway structure is eroded. Equipment and parts at the intake gate are corroded. Open intake pits show deterioration. Defects remain unresolved beyond the Defects Liability Period. Inspections at Karuma, Isimba and Nalubaale-Kiira revealed that none of the plants have a floating boom, and there is significant water weed accumulation at intake points.

These are not minor technicalities. They are red flags at facilities that cost taxpayers billions.

Even older plants are not spared. Of the 79 investments approved over three years for Nalubaale-Kiira Hydro Power Plants, only 14, representing 18 percent, had been completed by the time of audit. The majority remain stuck in procurement.

Meanwhile, Namanve Thermal Power Plant’s 50MW capacity has dropped to 35MW as two units have been out of service since May 2024 due to overdue overhauls. Trade and other payables increased by UGX 3.719 billion to UGX 41.881 billion, including UGX 9.214 billion related to heavy fuels and oils for Namanve and UGX 1.408 billion pertaining to the Eskom buyout outstanding since May 2023.

Receivables are swelling. Trade and other receivables increased by UGX 38.250 billion, rising to UGX 156.911 billion. Of UGX 108.943 billion outstanding from unpaid power sales to UETCL, UGX 11.985 billion relates to the Namanve capacity charge for December 2022 to December 2023. The Accounting Officer acknowledged that long-outstanding receivables from UETCL persist but confirmed that recovery efforts continue. Conversion of UGX 566 billion of long-outstanding interest arrears into equity improved liquidity during the period.

Still, contractor payments are delayed, with some cases exceeding 200 days, leaving UGX 4.806 billion owed to four contractors unpaid.

Budget performance also raises eyebrows. UEGCL budgeted to receive UGX 620.016 billion in revenue for FY 2024/2025, of which UGX 217.279 billion was collected. It spent UGX 217.279 billion out of UGX 332.013 billion available for expenditure, reflecting a 65 percent absorption rate. Of 204 critical tasks assessed, 133 were fully implemented, 65 partially implemented and six not implemented at all.

Staffing gaps compound operational challenges. Uncertainty from a pending sector merger disrupted the 2023–2028 strategic plan and led to the loss of 12 critical staff during the financial year. Only 393 of 491 approved positions are filled, leaving 98 key vacancies unfilled. Out of 61 planned recruitments, only 44 were completed.

Despite reporting profits, UEGCL did not distribute dividends to government, citing the need to retain earnings for planned investments and projects. The Auditor General advised the Accountant General to ensure that public corporations develop clear dividend policies to balance reinvestment with shareholder returns.

Yes, UEGCL posted an operating margin of 27 percent, placing it among the stronger performers in that metric. Its Return on Assets improved from 1.25 to 1.67. But both figures remain below the 5 percent ROA threshold generally considered adequate, and the profitability decline tied to Karuma’s underutilization overshadows the positives.

The Auditor General’s opinion was unqualified, meaning the financial statements present a true and fair view. Yet an unqualified opinion does not erase operational inefficiencies, underutilized megaprojects, mounting debt and unresolved plant defects.

So who is to blame?

Is it low national demand and policy prioritization of private producers? Is it weak coordination between UEGCL, the regulator and the transmission company? Or does the buck stop with the CEO who has held office for over a decade and the Board that oversees him?

Ugandans are watching. Billions were borrowed to light up the nation and power industrialization under Vision 2040. If Karuma continues operating at 30 percent, if erosion and corrosion go unchecked, if contractors wait over 200 days for payment and if debt remains above 80 percent, then tough conversations cannot be postponed.

Is it time to crack the whip on top bosses? Or will government continue cushioning shortfalls while dams spin below capacity?

The turbines are humming — but so are the questions.