The Parliament of Uganda is bracing for a billion-dollar debate today, with lawmakers set to make a game-changing decision on a massive loan deal that could reshape Uganda’s electricity sector.
The government’s €190 million (approx. UGX 800 billion) proposal to buy out UMEME Limited, the country’s largest electricity distributor, is the centerpiece of the discussion but it’s not the only loan request on the table.
The Minister of Finance, Planning, and Economic Development is also pushing for Parliament to approve a series of other hefty borrowing proposals, including an USD 100 million loan from the Arab Bank for Economic Development in Africa (BADEA), another USD 50 million from BADEA’s public window, and USD 25 million from the OPEC Fund for International Development (OFID). These funds would go toward capitalizing Uganda Development Bank Limited (UDB).
In addition to these, another motion on the table seeks approval for the government to borrow up to USD 190 million from Stanbic Bank for the UMEME buyout. The deal would allow Uganda to take over the management of UMEME, whose 20-year concession is nearing its expiration in 2025. But with Uganda’s already ballooning public debt, opposition MPs are questioning whether this is a good investment or a cash grab for shareholders.
It’s not just the UMEME buyout that has Parliament in a frenzy. The series of loan requests lined up for debate are raising eyebrows, with concerns about the country’s long-term financial stability. Critics argue that the government is stacking up loans to address short-term issues, without a clear plan for repaying them.
While these loans are presented as strategic for Uganda’s growth, some MPs believe the UMEME buyout is not a deal for the people, but a bailout for a private company. UMEME has faced criticism over high tariffs, power outages, and technical losses during its concession period.
The government has assured Ugandans of its preparedness to take over electricity distribution from Umeme Limited when the company’s concession officially ends on April 1, 2025.
In a statement issued by the Ministry of Energy and Mineral Development (MEMD), the government reaffirmed that Uganda Electricity Distribution Company Limited (UEDCL) will assume full responsibility for power distribution. The Ministry of Finance is currently finalizing the process of securing $50 million through internal borrowing to support UEDCL’s capital investments.
“By the end of next week, these funds will be available to ensure that UEDCL is financially equipped to improve the quality of service,” the statement read.
Meanwhile, the government is also seeking Parliament’s approval of $190.9 million (Shs700.1 billion) to settle Umeme’s buyout claims. Authorities have emphasized that this is not a renewal of Umeme’s concession but rather a fulfillment of contractual obligations.
With concerns about power supply reliability, the Ministry has directed Umeme to continue its contractual obligations until March 31, 2025. UEDCL has also been tasked with preparing for immediate corrective measures once it assumes control.
Regarding staffing, the Ministry assured the public that UEDCL’s restructuring process is designed to enhance efficiency, eliminate redundancy, and prioritize merit-based recruitment to ensure a smooth transition.
As Uganda moves towards fully state-managed power distribution, the government has pledged to maintain efficiency and affordability, reassuring consumers that service quality will improve under UEDCL’s leadership.
