By Mulengera Reporters
The Ministry of Finance has warned that Uganda risks paying hefty penalties if it fails to secure a US$190,988,565 (UGX696.621Bn) loan for the Umeme Limited buyout before the end of February 2025. With Umeme’s 20-year concession set to expire, the government must pay the buyout amount on time or face escalating interest penalties—10% if delayed by up to 45 days, 15% if delayed up to 90 days, and 20% beyond that.
Henry Musasizi, Minister of State for Finance, made the revelation before Parliament’s National Economy Committee on February 25, 2025. He emphasized that timely payment is essential for a smooth transition of electricity distribution assets to the Uganda Electricity Distribution Company Limited (UEDCL).
“This financing should be made available by the end of February 2025. Any delay beyond 30 days will attract interest of 10%, increasing to 15% between 46 and 90 days, and 20% thereafter until full payment is made,” Musasizi warned.
Tight Deadline
Lawmakers expressed frustration over the rushed timeline, calling it unrealistic and potentially deliberate. Robert Migadde (Buvuma County) described the loan request as one of the most challenging ever presented to the National Economy Committee, questioning whether Parliament was being set up for failure.
“This is one of the most difficult requests we have received. Today is the 25th, and the deadline is the 28th of February. Who makes such agreements with these harsh interest rates? We don’t even have an Auditor General’s report confirming the US$190M figure,” Migadde lamented.
Allan Atugonza (Buliisa County) criticized the government’s handling of the matter, suggesting that the tight deadline could be a ploy to justify extending Umeme’s concession.
“These people have set us up for failure. How do you expect Parliament to approve a loan in three days? This seems intentional—someone doesn’t want Umeme to leave. We will fail to meet this deadline, and they will use that as an excuse to extend the concession,” Atugonza argued.
Hassan Kirumira (Katikamu South) voiced similar concerns, accusing the government of rushing the process without allowing thorough scrutiny.
“They want Parliament to work like donkeys to process this loan in just three days. This loan is a stillbirth—there’s nothing we can do about it,” Kirumira fumed.
In response, Minister of State for Energy Opolot Okasaai clarified that the government has until March 31, 2025, to make the payment, and penalties would only apply if the deadline was missed.
“The actual payment deadline is March 31, 2025. The penalties only kick in after that. We request the Committee to approve this loan in time to avoid unnecessary interest charges,” Okasaai explained.
Buyout Loan
The Ministry of Finance defended the decision to secure the UGX696Bn loan from Stanbic Bank Uganda, arguing that it is necessary to transition from expensive private capital to more affordable public financing.
Minister Musasizi stated that the government’s refusal to renew Umeme’s concession aligns with efforts to lower electricity costs and improve distribution efficiency under UEDCL.
“Eliminating expensive private capital and optimizing concessional loans will enhance electricity affordability and support Uganda’s industrialization aspirations. Government is obligated to compensate Umeme for unrecovered capital investments as per the Auditor General’s assessment,” Musasizi explained.
Umeme Debt
MPs questioned why the government was prioritizing Umeme’s buyout over other outstanding domestic debts, which amount to over UGX3 trillion. Moses Ogwal Goli (Dokolo North) criticized the special treatment given to Umeme.
“Why is this debt so special? Many private sector players are owed money by the government. Are we encouraging others to threaten legal action to get paid?” Ogwal questioned.
Stella Atyang (Moroto DWR) faulted the government for failing to conduct a feasibility study before determining the buyout figure, calling the estimated UGX696Bn an arbitrary number.
“The amount is merely an estimate because no proper assessment was done. We all agree that Umeme has its weaknesses, but approving a loan without an exact figure is irresponsible,” Atyang remarked.
Hassan Kirumira (Katikamu South) also sought clarity on what exactly the government was compensating Umeme for, urging transparency in the process.
As the deadline looms, the controversy surrounding the Umeme buyout loan continues to grow. While the government insists that the loan is necessary for a smooth transition, MPs remain skeptical about the rushed process, lack of proper auditing, and the possibility of an intentional delay to justify Umeme’s continued operation. Whether Parliament approves the loan or not, the issue highlights broader concerns about Uganda’s financial planning and energy sector management-Parliament Watch. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
