By Mercy Agumenaitwe and Leonard Kamugisha Akida,
NATIONAL:
Parliament has asked the Ministry of Energy and Mineral Development to conduct a study on the status and performance of energy distributor, Umeme, as its concession comes to an end.
In 2015, government granted further concession to Umeme expiring in 2025, but subject to renewal.
The power distributer reportedly a total investment of USD547.5 million as of December 2021, with a recovery of US$331.94 million. It is reported that there is US$215.6 million outstanding.
Although the Ministry of Energy sought Shs256.2 billion as part of the money to start the buyout in phases, MPs have recommended that the Government should focus on assessing the status of Umeme and its performance instead of looking for money for a buyout.
The demands were made on Tuesday January 18, during the meeting between the Members of Parliament Committee on Environment and Natural Resources and officials from the Ministry of State for Energy led by minister Sidronius Okaasai Opolot and Permanent Secretary Irene Batebe to discuss the Budget Framework Paper for the financial year 2022/23.
Appearing before the committee, Okaasai petitioned parliament to allocate Shs256.2 billion to the ministry to help in starting the payment process of the Umeme buyout. He said this would help the Government manage the buyout effectively.
“This is a proposal we are making to make the final buyout simpler,” Okaasai said.
However MPs questioned the request for the budget for the buyout.
Hon Elijah Okupa, the Kasilo County MP said that the previous Parliament had recommended for the termination of the Umeme contract because they did not meet the concession terms and conditions. Okupa suggested that more concentration should be put on studying the status and performance of Umeme than the buyout.
“There is a reason those who drafted the concession included the study in the 17th; they knew certain conditions had to be met. Has Umeme performed 100 per cent? That is why we needed an evaluation of the performance of Umeme,” Okupa said.
President Museveni recently directed the elimination of Uganda’s leading power distributor Umeme from supplying electricity to the country’s industrial hubs, saying the power going to the various industrial parks will bypass Umeme as a way of cutting costs.
“I need you to listen to this and take notes; for industrial parks, the power will go straight from generation to the industrial parks, not through Umeme,” Museveni ordered.
Museveni attributable high costs of electricity to the government officials who opposed his directive and went on to sign a very expensive deal for construction of Bujagali hydropower plant, and the 2005 concession that allowed Umeme – a private company – to take over power distribution from Uganda Electricity Distribution Company Ltd (UEDCL).
Today, majority of the Umeme shares are owned by Ugandans through the National Social Security Fund (NSSF).
Umeme is now remaining with three years to end its 20 years concession and President Museveni has in recent past threatened to reject the renewal although there are reports that the power distributor is seeking for a renewal.
The Committee Chairperson, Dr Emmanuel Otala said that providing funds for the buy-out now is speculation adding that a study should be undertaken to inform further decisions.
“We cannot begin budgeting for something we don’t know; it is important that a study is done that will inform the termination or progression of the concession,” he said.
Furthermore, Irene Batebe, the Permanent Secretary, Ministry of Energy said that they were seeking the money to pay the buyout in installments pending a final decision from Parliament.
She told the committee that the Government was planning to regulate further investments by Umeme to ensure the Government does not have to pay a lot of money.
Okaasai agreed with the members and conceded on the proposal to halt the demand for funds for the buyout and instead told the committee that they will progress with the study through the Office of the Attorney General.
“I would wish to concede that Umeme will continue investing and we are going to submit to the Committee of Budget for a study and we are proposing that the study be done by the Auditor General as we continue discussions with cabinet on the future of Umeme,” he said.
