Umeme Limited has officially relinquished control of Uganda’s electricity distribution back to Uganda Electricity Distribution Company Limited (UEDCL).
The company’s 20-year concession, which began on March 1, 2005, ended at midnight on March 31, 2025. The handover, described as a “big switch,” was witnessed by Energy and Mineral Development minister Ruth Nankabirwa and state minister for Energy Sidronius Okaasai Opolot.
Some of the speeches at the handover ceremony had a sentimental tone, likened to eulogies for a prominent figure. Many acknowledge that Umeme Limited has left an indelible mark on Uganda’s electricity distribution network despite recent public concerns over the buyout amount claimed at the end of its concession.
Selestino Babungi, who has served as Umeme’s managing director for over a decade, reflected on the company’s impact over the past 20 years.
“In 2005, we were handed a very small switch. Now, we are giving back a very massive one,” he remarked.
As Umeme exits, Babungi stated that the company has addressed many of the challenges that existed before it was awarded the concession. These included low connectivity, inefficiency, and limited technical capacity within the electricity supply industry.
“And the whole sector was deemed not commercially viable. That led to the past reforms made twenty years ago,” he added.
What has Umeme left behind?
Babungi explained that when Umeme was awarded the concession, the government sought private sector investment in the power distribution network. Over the course of the concession, more than $850 million was invested in the sector.
“The network has more than doubled. You handed over 5,000 transformer zones, and we are giving back 170,000 zones, 34,000 kilometers of power lines. You gave us a quarter of a million customers; we are handing back nine times that 2.2 million customers,” Babungi reported.
He also highlighted Umeme’s success in reducing energy losses, a key financial milestone.
“We may take it lightly but this eats into the financial viability of the sector. In the past we had 35% energy losses, we are handing over 16%,” he noted.
Babungi added that the power distribution network’s revenue has grown from Shs 160 billion in 2005 to Shs 2.5 trillion today.
“It is a $700 million revenue business growing at an average of 10%. That is what we are handing over, and we believe that should be protected because it can attract investments upstream, downstream and in generation,” he suggested.
He emphasized that Umeme is leaving behind a growing sector.
“What is very important is that we see some sectors grow in the negative. We are selling five times the volume power compared to the previous time when we started,” he revealed.
Is the network falling apart?
There have been concerns that Umeme is exiting when the electricity network is in decline, with claims that power outages are due to asset stripping. Babungi dismissed these allegations, stating that the network is carrying 70% more power than it did five years ago.
“We are loading the network with a lot of power without expanding its capacity to carry that load. That is the challenge we are facing,” he explained.
He noted that Umeme has built a solid foundation for power distribution, which the next operator should build upon.
“My biggest concern is the rapid increase in power demand. If we do nothing in the next three years, we will run out of power,” he warned.
Umeme Limited Board chairperson Patrick Bitature acknowledged that discussions on the buyout amount were ongoing.
“Some people feel that negotiations should continue, and they will. I want to assure our shareholders that the buyout amount is not what they expected, but that is a discussion for another day,” he stated.
The government recently paid Umeme Limited $120 million, but the company claims it is owed $234 million. Under its contractual obligations, Umeme will continue supporting UEDCL for the next six months during the transition.
Change of guard, change of uniform
From April 1, 2025, most former Umeme employees will return to their roles under UEDCL, with the only visible difference being their new uniforms. UEDCL managing director Paul Mwesigwa confirmed that all jobs outlined in the new structure, approved by the ministry of Energy, have been filled by former Umeme employees.
“We believe we have the best team to take on this new mandate,” he said. He revealed that 2,710 former Umeme employees have been absorbed into UEDCL.
“We still have 11 positions left to fill, but we expect to conclude that by the end of today,” Mwesigwa added.
His company has received $74 million to facilitate the transition. He also confirmed that all Umeme assets have been audited and registered under UEDCL’s accounts.