Kampala, Uganda: Government is facing fresh backlash after electricity distributor Umeme Limited revised its compensation demand to Shs 1.1 trillion, nearly triple the amount the Auditor General had recommended, reigniting tensions over Uganda’s troubled power concession as the dispute heads to international arbitration.
In a public notice issued Monday, June 02, Umeme said while partial agreement had been reached during recent negotiations with the government, the full claim remains unresolved, with the company now demanding USD 292 million (about Shs 1.1 trillion), well above the USD 118 million (Shs 446 billion) previously paid.
“Although the negotiations were able to resolve and agree on certain amounts as payable, no resolution was reached on the payment of Umeme’s entire claim, which stands in the sum of USD 292 million over and above the admitted Buy Out Amount of USD 118 million already paid by the Government,” Umeme stated.
Umeme had initially tabled a claim of USD 234 million, but after further reconciliation of its investments, and with the Auditor General still auditing the company’s 2025 infrastructure, the utility says the figure has risen.
The company confirmed it will now proceed to arbitration in London as stipulated in the concession agreement, adding, “The Arbitration Dispute Reference shall be served upon the Government in the coming days.”
The dispute follows the government’s decision not to renew Umeme’s 20-year electricity distribution concession, which expired in February 2025. Under the terms of the agreement, the government is obliged to compensate the company for unrecovered investments made over the concession period.
Meanwhile, the Uganda Securities Exchange has extended the suspension of Umeme’s trading counter until June 12, 2025, citing investor uncertainty stemming from the standoff.
The Stock Market also granted Umeme more time to release its financial results for the year ended December 31, 2024, now expected on June 12.
The compensation row is expected to have wide-reaching effects on investor confidence and the future of Uganda’s public-private infrastructure partnerships, with analysts warning of prolonged legal and financial implications for the country.
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