Uganda plans to borrow $190 million from Stanbic Bank, a major local commercial lender, to buy out Umeme Limited when its 20-year concession expires in March 2025.
This follows the government’s decision in 2024 to grant the Uganda Electricity Distribution Company Limited (UEDCL) license to distribute and sell electricity in the country. UEDCL is expected to take over from Umeme on April 1, 2025.
It would be recalled that in 2022, the government declined to renew Umeme’s contract, citing high tariffs as one of the reasons for ending the concession.
On Tuesday, State Finance Minister Henry Musasizi announced on social media that he had submitted a request to parliament for approval of the loan.
“I have today laid a proposal to borrow US$190 million from Stanbic Bank for the Umeme Limited buyout,” he wrote.
The buyout is in line with the terms of the concession, which entitle the company to compensation for unrealized capital investments at the end of its contract.
Since taking over Uganda’s electricity distribution network in 2005, Umeme has invested heavily in infrastructure upgrades to improve reliability and capacity.
Under its management, electricity access expanded from an estimated 250,000 customers in 2005 to over 1.6 million by 2020. Meanwhile, power losses dropped significantly, with distribution efficiency improving from 50% to 80%.
Fast forward to 2023, Umeme reported a 9.6% increase in electricity sales compared to 2022, largely driven by growth in customer connections and improved access to power. That same year, power losses fell to 16.2%, the lowest recorded in the 20-year concession period.
Despite these improvements, millions of Ugandans still lack reliable electricity.
A 2024 survey found that the country’s electricity infrastructure remains concentrated in urban areas, leaving rural communities, where more than 75% of the population resides, with limited access to dependable power.
Additionally, electricity ranks as the ninth most pressing issue Ugandans want their government to address.