KAMPALA, Uganda — A fresh dispute has erupted over Umeme’s exit from Uganda’s energy sector, with the Office of Attorney General ruling that the Electricity Regulatory Authority (ERA) did not have unfettered discretion over the power distributor’s investment requirements.
“The implication of the same will be that in as far as the buyout amount is concerned, the government will stand behind Umeme’s investments real or imagined, including those not formally approved by ERA, when it entered into the Lease and Assignment Agreement,” said a Ministry of Energy official, who preferred anonymity.
Related posts
The Attorney General’s opinion has disconcerted ERA executives, who believe it favors Umeme, currently engaged in a dispute with the Ministry of Energy over a $234.7 million buyout amount.
Umeme’s claim is based on the Net Accumulated Capital Investments of the Lease and Assignment Agreement. However, ERA assessed the buyout amount at $127.655 million, while the Ministry of Energy initially estimated it at $225 million.
A special audit by the Auditor General initially put the buyout amount at $191 million, which was later revised to $201 million.
The dispute centers on the definition of “modification” under the Lease and Assignment Agreement and whether ERA’s authorization was required before Umeme undertook capital investments.
“The wide and problematic interpretation underpins the Attorney General’s stance that Umeme did not need ERA’s prior consent to carry out network improvements during the concession,” the Ministry of Energy official said.
The Attorney General’s opinion states that ERA’s prior approval is not necessary for investments to be deemed “modifications” under the agreement.
ERA authorities declined to comment on the matter. However, sources said the Attorney General’s opinion has potential “implications” on the buyout amount and specifically gives Umeme confidence to stand ground on its $234m claim.
“We played our part. We submitted our claim as we know them to the Auditor General, and we are waiting for their final position,” said Peter Kaujju, Umeme’s head of communications.
The Energy ministry Permanent Secretary, Irene Bateebe, said she was yet to look at the Attorney General’s advisory.
Umeme’s exit from Uganda’s energy sector is set to occur at the end of March, with the Uganda Electricity Distribution Company Limited taking over as the national power supplier.
Discussion about this post