Government To Establish Sole Electricity Company To Replace ‘Money Vampires’ UMEME After Ending Their Contract

Government Establish Sole Electricity Company To Replace 'Money Vampires' UMEME After The End Of Their Contract

By Uganda Online Media

Kampala: The government of Uganda is planning to establish its sole company to replace power suppliers UMEME Limited when their contract expires in 2025.

This was confirmed by the State Minister for Privatisation and Investment, Hon. Evelyn Anite saying the sole electricity company will ensure the provision of affordable and accessible electricity for all Ugandans, especially industrialists.

Anite noted government wants to do away with middlemen in electricity generation, manufacturing, and supply, whom she says President Museveni faulted for focusing on profit-making at the expense of service delivery to Ugandans.

“The President directed that we should get these middlemen out of the business of providing electricity to citizens and also manufacturing. Middlemen are looking at return on investment but the government is not looking at return on investment – it will be looking at providing a service that must be cheap and available,” said Anite.

By middlemen, Anite referred to Uganda Electricity Generation Company Ltd, Uganda Electricity Transmission Company Ltd, Uganda Electricity Distribution Company Ltd, and Umeme among others.

The contract of the power distributor, Umeme, ends in 2025. President Museveni is opposed to the renewal of the contract, whose amendments were detrimental to the Ugandan public thus directing Umeme to stop new investments, pending an audit. 

Anite said the successor electricity company will be fully owned by the government with the Ministry of Energy and Mineral Development as the major shareholder with 51 percent and the finance ministry as the minority shareholder.

Anite made the revelation while appearing before the Committee of Environment and Natural Resources, on Thursday, 10 March 2022 where she had been invited to make responses on the Electricity (Amendment) Bill, 2022 when MPs squeezed her with questions on why citizens are being milked by the commercial companies currently running the electricity sector who they accuse of failing to ensure consistent and affordable power and the government has not done much about it,

In January this year, the Ministry of Energy and Mineral Development recommended the halting of new investments by Umeme.

The Minister of State for Energy, Hon Sidronius Okaasai Opolot said this during a meeting with members of the Committee of Environment and Natural Resources to respond to issues raised during the scrutiny of the budget framework paper for the financial year 2022/23.

Okaasai said that as Ugandans’ demand for electricity infrastructure, has got an impact on the final buyout of Umeme, there is a need to watch out for new investments made.

“To manage the concession buyout and minimize suffocating expenditure of Government when the Umeme concession ends, it is important that additional investments by Umeme be regulated and or halted to reduce on the final buyout amount,” Okaasai told the committee.

He added that Government should start providing annually for buyout amounts.

Umeme intends to invest in extending the distribution of power which includes buying transformers, poles, and construction of substations with the hope that their concession which is nearing an end can be extended.

As of December 2018, Umeme’s capital investments amounted close to Shs700 billion, and yet they had projected to invest Shs1.5 trillion.

Although Umeme wants the concession renewed since they cannot get investments from abroad, Government is now turning its focus into public financing of electricity.

According to Okaasai, this is intended to reduce the high costs of electricity.

“The high costs are driven by the private sector participation especially generation. Public financing of electricity generation, transmission, and distribution will be required if the final consumer prices are to be reduced in the medium to the long term,” Okaasai said.

The unit cost of generation of power averages US$8.8 and final costs including transmission and distribution average 12 cents.

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