KAMPALA, Uganda — Umeme Limited announced Monday it is disputing the amount the Ugandan government is offering in a buyout at the end of its 20-year electricity distribution concession.
The company said in a public notice that it served a formal notice of the dispute to the Ministry of Finance on April 11.
The action triggers a 30-day negotiation period as outlined in a 2005 agreement.
Umeme said the dispute stems from the government’s disagreement with its valuation of the buyout figure following the March 31 handover of the distribution network to the Uganda Electricity Distribution Company Limited.
Umeme estimates its unrecovered investments at $234 million.
A special audit commissioned by the government and conducted by the Auditor General put the figure at $118 million, or about 430 billion Ugandan shillings.
The Energy Ministry adopted the Auditor General’s figure, rejecting Umeme’s initial estimate and a previously considered $190 million valuation, or about 700 billion Ugandan shillings.
Energy Minister Ruth Nankabirwa said, “The Auditor General has audited and determined $118 million as the buyout amount.”
The dispute centers on whether the government has fulfilled its obligations under the agreement, which requires compensating Umeme for investments not fully recovered during the 20-year term.
Umeme argues that the $118 million valuation undervalues its capital expenditure and violates terms agreed to in 2005.
The agreement allows either party to initiate international arbitration if negotiations fail. If the two sides don’t reach a settlement by May 11, the matter could proceed to arbitration in London.
Umeme cautioned investors about trading its shares amid the uncertainty.
“Shareholders and investors are advised to exercise caution when dealing in the Company’s securities until the outcome of the Dispute is known,” the company said.
The dispute casts uncertainty over the transition to public electricity distribution.
The government has promoted the takeover by Uganda Electricity Distribution Company Limited as a way to lower electricity costs and restore control of the grid.
But the unresolved buyout claim raises questions about transparency, investor protection, and Uganda’s handling of public-private infrastructure partnerships.
Umeme’s concession, which began in 2005, involved company investments of more than $600 million in network upgrades.
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