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Gov’t Seeks UGX 697 Billion Loan To Fund Umeme Buyout Ahead Of Concession Expiry

The Ugandan government has formally requested parliamentary approval to borrow $190.9 million (UGX 697.8 billion) from Stanbic Bank to finance the buyout of Umeme Limited, the country’s main electricity distributor.

The proposal was presented to Parliament on February 18, 2025, by Henry Musasizi, the Minister of State for Finance. Speaker Anita Among referred the request to the Committee on National Economy for further examination before a final decision is made.

This move follows the government’s decision not to renew Umeme’s concession, which is set to expire on April 1, 2025. The Uganda Electricity Distribution Company Limited (UEDCL) is expected to assume full control of the country’s electricity distribution thereafter.

According to the 2025/26 Budget Framework Paper from the Committee on Environment and Natural Resources, Umeme had recovered $608.6 million (UGX 2.223 trillion) of its total investments by December 31, 2024. However, an outstanding amount of $90.1 million (UGX 329.1 billion) remains unrecovered and has been verified by regulators. Additional investments of $53.8 million (UGX 196.6 billion) are still under review, while another $35 million worth of investments for 2024 and 2025 is pending verification.

To ensure a smooth transition, Parliament recommended strengthening UEDCL’s financial and operational capacity, as it is set to take over Umeme’s distribution responsibilities alongside four other regional electricity providers. Lawmakers also emphasized the need for UEDCL to access long-term, low-interest financing to modernize and expand Uganda’s power distribution network.

Furthermore, the Minister of Energy was urged to ensure that Umeme’s skilled workforce is fairly absorbed into UEDCL to prevent job losses and maintain sector stability.

The loan request comes amid concerns over Uganda’s rising public debt, which surged from UGX 97.5 trillion in June 2023 to UGX 109.8 trillion by June 2024, according to the latest audit report. This growing debt burden has raised questions about the country’s financial sustainability as it undertakes major infrastructure and energy reforms.

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