BIG STORY! Museveni Declines to Renew UMEME Contract

President of the Republic of Uganda, H. E Yoweri Kaguta Museveni has Saturday declined to renew the contract of Uganda’s Electricity distributor, UMEME Co.Ltd, this website has learnt.

President Museveni has persistently and deliberately continued to condemn the hikes in power tariffs despite the fact that we’re the manufacturers and suppliers of power to the rest of the EAC countries.

Museveni, again, re-echoed the same sentiments towards UMEME, the South African based power distributors in Uganda during his Independence day speech on October 9, where he hinted on high tariffs for domestic consumers, and has therefore spent quite a number of years sharing his head on how to avert this, given the fact that the negotiators of the first concession signed a 20-year contract with UMEME, which the president was reluctant to interfere with.

According to reports, Museveni could finally be parting ways with Umeme after their 20-year concession expires in march 2025 if our well-placed spy in State House, where the Saturday meeting took place between UMEME top officials and the president is to go by. Highly placed sources in the State House on condition of anonymity told this reporter that; “Muzei isn’t happy with these guys, he wants their contract to end and part ways”.

To some Ugandans, including a section of legislators, even preferred to have privatized the national power sector to a foreign company, UMEME was a very big over sight on the side of Uganda Gov’t, because ultimately, they argue, according to them, ‘these foreign companies come to make money and take to their countries to develop their own at the expense of our poor economy’.

Its alleged that the president on Saturday during the meeting that took place at State House Entebbe was assertively demanding for a justification from the already timid UMEME top officials as to why they think their contract should be renewed when the current one expires. UMEME team was led by their chairman, city business mogul Patrick Bitature and UMEME Managing Director Selestino Babungi along with other top officials of the company.

On the other hand, they found the president well backed up and equipped with his energy experts including the energy minister. He also had in his hands a full dozier file of all their mischief including hiking operational and production costs which are finally passed unto the final consumer.

When contacted for a comment, Mr. Peter Kaujju, the head of communications couldn’t deny nor confirm the developments though his comment further cast a dark cloud on the company’s hopes for a renewal of the contract.

“There are fruitful discussions going on at a high level about the energy sector and the concession is among. We await the outcome of these engagements. For now, we continue with our work to ensure the distribution of safe and reliable power to Uganda. The current concession runs until 2025 and we are giving our best. When there’s any development especially on the new concession, we will be happy to share details. Cheers.” Kaujju said in a WhatsApp response.

This is UMEME’s second attempt seeking the president for an extension of contract, the first being in March 2018. Instead of granting renewal, the president instructed the energy minister Irine Muloni then, to instead look for a cheaper ‘alternative’.

Museveni accused UMEME then of conspiring with officials from the Ministry of energy to inflate its operation costs, which finally trickles down to the end user with hiked prices.

It should be remembered that UMEME took over power distribution from the Uganda Electricity Distribution Company Ltd (UEDCL) on March 1st 2005 through a concession that spans up to march 2025.

Although this deal was highly criticized and condemned by whistle blowers, and investigated by Parliament which recommended for its termination, they never succeeded as this would attract hefty legal penalties in compensation, a city lawyer warned.

Mr. Museveni, in a letter dated march 13th, tasked Minister Muloni then to explain to him how UMEME’s technical losses still remained as high as 17% yet they claimed (UMEME) to have injected in up to USD500Million in distribution infrastructure to avert the same losses.

In the run up to the signing of the concession in 2005, the Auditor General had calculated that UMEME’s losses, both technical (dilapidated infrastructure) and commercial (power theft etc) would stand at 28%. But the president hiked it up to 38%, following a meeting between UMEME investors and a delegation from the energy ministry in the US. The president did this to ensure they do a good job without excuses, according to our insider.

However, in 2009, when Gov’t instituted an Interim review on the Electricity Tariffs Committee, it among others, called for the re-nationalization of the energy sector by re-instating UEDCL to supply the energy. The committee that was chaired by president’s own young brother Gen. Salim Saleh termed UMEME deal as ‘not well thought after’.

Following committee findings, UMEME’s estimated losses somehow, mysteriously summersaulted from 38% to 28%! Of the 28%, 15% were said to be technical and 13% commercial (theft).

Currently, thanks to various measures put in place by UMEME itself such as the pre-paid metering systems, media campaigns among others, UMEME said it reduced its commercial losses (theft) from 13% to 1%.

However, the president contend that UMEME still lose up to 17.3% energy due to technical issues up from 15% yet they claim to have injected in a whopping half a billion US dollar investment in distribution infrastructure networks to avert the same. He wonders why then they are not able to reduce on technical losses.

“If they invested so much money, then why do the technical losses not decline?” wondered the president in his letter to then Minister Muloni.

The president said it was not correct for the final consumer to be penalized for the mysterious investment and mysterious technical losses that should have been eliminated long ago.

“In the mean time, there should be no question of renewing UMEME’s concession, let us look for cheaper way of modernizing and expanding the transmission and distribution lines,” Museveni’s letter to Muloni said.

At that material time when the president was fuming, UMEME, in a panicky mood, told media that they were planning to inject in another USD1.5billion in distribution infrastructure network to address technical losses among others.

Well, since 2009, it’s now 11 years down the road, whether that dream came true is a matter you can also interrogate at your community village level wherever you’re reading this from.

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