For nearly two decades, Umeme Limited has been Uganda’s primary electricity distributor, operating under a controversial concession agreement. The 20-year contract signed in 2005 has been a source of heated debate, marred by complaints of poor service delivery, high tariffs, and unfulfilled promises.
Now, as the government rushes to buy out the company and take over its operations, the process has been anything but smooth. From a badly negotiated contract to a hasty loan approval riddled with red flags, this entire saga paints a picture of a government in disarray, scrambling to fix its past mistakes.
So how did Uganda end up in this mess?
The seeds of this crisis were planted in 2005 when Uganda signed a 20-year electricity distribution concession with Umeme, a private company majority-owned by Actis, a UK-based investment firm.
From the very start, this deal did not favour Ugandans, you could tell. It granted Umeme significant control over electricity distribution while committing the government to pay costly compensation fees if the contract was ever terminated.
But it gets worse. President Museveni himself has openly criticised this deal for years, admitting that it was poorly negotiated. On several occasions, he has lashed out at the terms, calling them unfair and suggesting that the government would eventually have to take back control.
If the President has been aware of these flaws for so long, why was there no strategic plan in place for a smooth transition? The government has known this transition was taking place in March 2025, why wait until the very last minute to scramble for a buyout?
Now the government is in Panic Mode. As Umeme’s concession nears its end on March 31, 2025, the government has suddenly found itself in a state of panic. Despite years of complaints about Umeme, there has been little groundwork laid for a smooth transition.
The Uganda Electricity Distribution Company Limited (UEDCL), which is expected to take over, is not financially ready to assume the role. According to the Electricity Regulatory Authority (ERA) boss Eng Ziria Tibalwa, UEDCL needs at least $50 million (about Shs170bn) in start-up capital—money the government does not currently have.
So why did the government not prepare in advance? Why is there a rush to take over without ensuring that UEDCL has the necessary funds and capacity to provide electricity efficiently? Could this result in an even bigger electricity crisis?
Let’s turn to this $190 million (Shs700 billion) loan, a deal shrouded in controversy. On March 20, 2025, last week, Parliament approved a $190 million loan from Stanbic Bank Uganda to fund the Umeme buyout. But this decision was anything but straightforward.
In fact, it was made against expert advice and in a manner that raises serious concerns about accountability, corruption, and financial prudence.
First, Loan Approved Without Verifying the Amount
One of the biggest questions surrounding this loan is the fact that it was approved without verifying the actual amount required. The Auditor General had not completed an audit to determine the precise financial obligations.
Two parliamentary committees recommended pausing the approval until the Auditor General’s report was finalised, but their advice was ignored. Why the rush? Who benefits from pushing through a loan without proper verification?
Secondly, how did Stanbic Bank quickly come into the picture? The government chose Stanbic Bank Uganda as the lender for this massive loan. But was there an open bidding process to determine the best financial deal? If there was, we would like to see it. Could there be hidden interests, kickbacks, or insider deals influencing this decision?
With this rush, who really benefits from this buyout? Who in government stands to benefit from this transaction? The fact that Parliament pushed through the loan without finalizing a financial audit raises red flags. Could it be that certain individuals or companies stand to make huge profits from this deal?
Away from the loan, is UEDCL even ready to manage electricity distribution?
The Electricity Regulatory Authority (ERA) has openly admitted that the government is not yet ready to take over from Umeme. The Uganda Electricity Distribution Company Limited (UEDCL), which is expected to take over, lacks the required funds and operational structure to handle national electricity distribution effectively.
If UEDCL is not ready, then why is the government forcing this transition? Won’t Ugandans experience worse electricity services, blackouts, and higher costs as a result of this poorly planned move?
There has been a pattern of government’s failure and uncoordinated decision-making.
The chaotic handling of the Umeme takeover is not an isolated case—it is part of a broader pattern of government mismanagement across multiple sectors.
The government has repeatedly demonstrated poor planning, rushed decisions, and a lack of coordination. The recent deployment of the Uganda People's Defence Forces (UPDF) to South Sudan revealed discrepancies among Ugandan officials, leading to public confusion.
On March 11, 2025, General Muhoozi Kainerugaba, the Chief of Defence Forces (CDF), announced via his X (formerly Twitter) account that UPDF commandos had arrived in Juba to support the South Sudan People's Defence Forces (SSPDF) amid escalating tensions.
However, on March 12, 2025, Defence minister Jacob Oboth-Oboth informed Parliament that he was unaware of this deployment and had not participated in any meetings authorizing such action.
In response to the Minister's statement, Colonel Chris Magezi, the Military Assistant for Public Relations to the CDF, told off the Minister that such operational decisions are within the military's purview and that the Defence Minister's role is primarily to represent the military in Parliament.
Magezi assured that the Minister would be briefed on the situation in due course.
The lack of coordination and communication among top officials has led to questions about the government's internal processes regarding coordination and communication.
If the government has failed in coordination in the military, what assurance do Ugandans have that electricity distribution will be handled any better? Could Umeme’s exit become yet another victim of state incompetence?
With UEDCL struggling to even secure the $50 million needed to start operations, it is clear that the government is rushing into a takeover it is not prepared for.
Will this lead to a repeat of the shabby service delivery seen in other sectors? Will Ugandans soon experience higher electricity bills, unreliable power supply, and increased corruption in the sector?
Uganda deserves better governance, proper planning, and transparency in public financial decisions. The rushed and controversial approval of the $190 million loan for Umeme’s buyout is yet another example of the government’s reckless financial decisions that will burden Ugandan taxpayers for years to come.
The people of Uganda must ask: Is our electricity distribution system about to become another casualty of state incompetence?