Newslex Point News in Uganda, Uganda news
Umeme Limited, a key player in the electricity distribution sector, has officially raised concerns with the government regarding the discrepancy in the buyout amount owed at the conclusion of its 20-year electricity distribution concession.
The company is at odds with the Auditor General’s valuation, leading to a formal dispute being declared.
In a public announcement released on April 14, Umeme Limited disclosed that it had formally issued a Notice of Dispute to the Ministry of Finance on April 11, marking the beginning of a 30-day negotiation window as stipulated in the 2005 Support Agreement.
The company’s Board of Directors emphasized the need to address the disagreement surrounding the Buyout Amount owed by the Government of Uganda.
The dispute stems from the failure of the Government to reach a consensus with Umeme Limited on the buyout figure, which remains outstanding subsequent to the handover of the distribution network to Uganda Electricity Distribution Company Limited (UEDCL) on March 31.
Umeme’s proposed estimate of $234 million clashed with the Auditor General’s assessment of $118 million, leading to a prolonged back-and-forth between the parties.
Implications of unresolved dispute and arbitration prospects
With the Energy Ministry endorsing the Auditor General’s valuation, tensions have escalated as Umeme asserts that the $118 million figure undervalues its capital investments and contravenes the 2005 agreement terms.
The looming prospect of international arbitration, as outlined in Clause 9 of the Support Agreement, adds a layer of complexity to the situation, with a deadline set for both parties to reach a resolution before potential arbitration in London.
The ongoing dispute has triggered cautionary measures from Umeme, urging shareholders and investors to tread carefully until a resolution is reached. Beyond financial implications, the standoff raises broader concerns about transparency, investor confidence, and the efficacy of public-private infrastructure collaborations in Uganda’s energy landscape.
Despite the handover marking the end of a significant concession period, the unresolved buyout claim casts a shadow over the transition from private to public electricity distribution.
Check also;
This is not a Paywall, but Newslex Point's journalism consumes a lot of time, hard-work and money. That's why we're kindly requesting you to support us in anyway they can, for as little as $1 or more, you can support us .Please use the button below to contribute to Newslex Point, Inc. using a credit card or via PayPal.
