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    National

    END OF UMEME ERA: Is Govt Ready for Electricity Sector Transition There-After?

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    END OF UMEME ERA: Is Govt  Ready for Electricity Sector Transition There-After?
    • February 22, 2024 • 2 months ago
    in summary
    Legislators are questioning the government's readiness to manage the electricity sector following Umeme's planned exit in March 2025. Legislator Mathias Mpuuga, raised concerns about the absence of bills to rationalize the energy sector and the proposed merger of electricity companies. The government plans to establish the Uganda National Electricity Company (UNEC) after Umeme's concession ends. Prime Minister Robinah Nabbanja assured Parliament that the Cabinet is addressing the issue and will provide a detailed report soon.

    A section of legislators has expressed doubts regarding the government's readiness to effectively manage the electricity sector following Umeme's scheduled exit in March 2025. The concerns were voiced by Nyendo-Mukungwe Division MP and former leader of opposition Rt. Hon Mathias Mpuuga, during a parliamentary session on Wednesday where he questioned the absence of bills aimed at streamlining the energy sector.

    The issue arose after the government hinted at consolidating the three existing electricity companies into a single entity. This proposal comes in the wake of the government's decision in December 2022 to inform Umeme that its contract would not be renewed beyond March 2025. Upon Umeme's concession ending, the government plans to establish the Uganda National Electricity Company (UNEC), effectively reinstating a monopoly similar to the one held by the Uganda Electricity Board prior to its breakup in 1999.

    Mathias Mpuuga highlighted that similar concerns were raised during the 2023 deliberations on the Electricity Bill. At that time, the House had directed the Energy Ministerto furnish a comprehensive report outlining the government's strategies for managing the expiration of the concession.

    Responding to Mpuuga's concerns, Prime Minister Rt Hon. Robinah Nabbanja assured Parliament that the Cabinet is actively addressing the issue and pledged to provide a detailed report in due course.

    "I want to inform the Member (Hon Mathias Mpuuga) that Cabinet is dealing with the issue and we shall report appropriately," stated Nabbanja.

    The discussions in Parliament reflect growing apprehensions regarding the transition of the electricity sector post-Umeme's exit. The government's proposed establishment of Uganda National Electricity Company - UNEC and the potential implications of reverting to a monopoly system have sparked debates among lawmakers, with many emphasizing the importance of a well-thought-out strategy to ensure the stability and efficiency of the electricity supply chain. As the March 2025 deadline approaches, stakeholders are closely monitoring developments and urging the government to address concerns regarding the sector's future management.

    The company’s 20-year power distribution agreement is scheduled to expire on March 31 next year after a government decision not to renew the contract. The power utility is listed on the Uganda and Nairobi Securities Exchanges.

    Umeme’s exit is subject to government settlement of outstanding investment bills. Under the exit plan, the government intends to recapitalise the Uganda Electricity Distribution Company Ltd with $64 million. Another $200 million-$300 million budget is required for the compensation of existing Umeme shareholders, according to local sources.

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