Government Refuses to Renew UMEME Contract, Company to Exit Uganda in 2025

Power distribution company, UMEME have confirmed that they will be exiting Uganda in 2025 after receiving this tough notice from the country's government that their 20-year contract will not be renewed upon expiry.

Umeme confirmed the development in a statement to the stock exchange today.  “Pursuant to Rule 36 (1) (a) and (b) of the Uganda Securities Exchange (USE) Listing Rules, 2021 the Company is required to amongst others disclose to its shareholders and the general public new developments in its sphere of activity which are not public knowledge and which may lead to material movements in the ruling price of its listed securities,” Umeme said in a press statement today.

“The Company has formally received written communication from the Government of the Republic of Uganda, notifying it that the current Concession will continue to run until its natural end in March, 2025 as stipulated in the Concession Agreements after which, there will be no renewal,” Umeme said.

Umeme added that “The Company remains committed to performing its obligations as per the existing Concession Agreements and will continue to operate and maintain the electricity distribution system in line with prudent utility practice to ensure continued service delivery through to the end of the Concession.”

According to sources, Uganda will form a state-owned electricity distributor to take over when Umeme Ltd.’s concession expires in March 2025, in a reported bid to reduce power tariffs by cutting out the intermediary.

Umeme further clarified that they are still committed to serving Ugandans until their contract expires in 2015.

The government will work on a payout for Umeme under a buyout clause ahead of the expiry, Minister of State for Energy Sidronius Okaasai Opolot said recently, without giving details. The planned Uganda National Electricity Co. will also assume generation responsibilities when the 20-year contract ends, he said.

UPDATE: The Government of Uganda is not to renew UMEME contract after their current concession ends in March 2025.

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