Umeme Limited is set to escalate its $292 million (Sh37.7 billion) compensation dispute with the Ugandan government to a London arbitration process after weeks of talks failed to end the stalemate.
The company, whose 20-year electricity distribution concession ended on March 31, 2025, now says it is going to seek an additional payment of $292 million after the Ugandan government paid it only $118 million.
The failure to reach an agreement has also impacted Umeme’s corporate actions, including publication of results for the year ended December 2024 and resumption of shares trading, with these now expected to be delayed until June 12.
Umeme’s shares last traded on March 28 when they closed at Sh16, a level that is substantially higher than what is indicated by the amount paid so far by the government.
“Although the negotiations were able to resolve and agree on certain amounts as payable, and which amounts will be paid by the government after the 31st day of May 2025, no resolution was reached on the payment of Umeme’s entire claim which stands in the sum of $292 million over and above the admitted Buy Out Amount of $118 million already paid by the government,” Umeme said on Friday.
“In the interests of the shareholders and the investing public, the company resolved to and will proceed to pursue the full recovery of all outstanding sums due through Arbitration in London as stipulated in the concession agreements.”
Umeme’s biggest shareholders include Uganda’s National Social Security Fund with a 23.4 percent stake, South African asset manager Allan Gray (14.82 percent) and the International Finance Corporation (2.78 percent).
The company, which is cross-listed on the Uganda Securities Exchange and Nairobi Securities Exchange, said that the Arbitration Dispute Reference shall be served upon the Ugandan government in the coming days in order to commence the arbitration process.
Umeme had expected to be paid its entire claim by the last day of the concession, but only received payment for part of the amount amid conflicting positions on the payout amount by various arms of the government including Parliament, the Electricity Regulatory Authority (ERA) and the Auditor General.
The company says it expects additional cash from the government, but that a large portion of the claim will remain in dispute, necessitating the commencement of the legal battle in London.
“The Office of the Auditor General is currently conducting an audit of the company’s 2025 investments, which once admitted and paid by the government would lead to a reduction in the claim,” said Umeme, whose assets were taken over by Uganda Electricity Distribution Company Limited (UEDCL).
Ahead of its listing on the USE in 2012, the company had warned investors of the risk of a lower-than-expected compensation at the end of the concession due to government sabotage.
“UEDCL is also required to approve Umeme investments related to the termination payment. UECDL may fail to verify and approve all Umeme investments, even if those investments had already been approved by ERA,” the company said in its initial public offering (IPO) prospectus.
