By Spy Uganda
Parliament has approved the government’s request to borrow $190 million (UGX 699.938 billion) from Stanbic Bank to finance the buyout of Umeme, despite recommendations from both the Auditor General and the Committee on National Economy to halt the process until the actual buyout amount is established. The decision, made during the plenary sitting on March 20, 2025, followed a heated debate over the discrepancies in the figures presented for the expenditure.
Attorney General’s Push for Urgent Approval
Attorney General Kiwanuka Kiryowa attempted to fast-track the approval by seeking the suspension of Rule 155 (3) of Parliament’s Rules of Procedure, which requires the Committee on National Economy to present its report before the House considers a loan request. Kiryowa warned that any delay in settling Umeme’s buyout would attract penalties for taxpayers.
“This matter has been with us for a very long time. It is urgent, and the deadline for payment is March 31, 2025. If we don’t make this payment on time, there will be penalties and additional costs. I request that we suspend Rule 155 (3) so that the Committee of the Whole House can consider this matter immediately,” Kiryowa urged.
However, Speaker Anita Among rejected his request after John Bosco Ikojo, Chairperson of the Committee on National Economy, announced that the committee’s report on the loan proposal was ready for presentation.
Committee Calls for Suspension of Loan Approval
The Committee on National Economy recommended halting the loan approval until the Auditor General, Edward Akol, determines the actual amount owed to Umeme. The committee cited inconsistencies in the figures provided by different government agencies.
“The Auditor General has not determined the final buyout amount. Given the limited time left before the Lease and Assignment Agreement (LAA) expires, the Auditor General should urgently reconcile with the Electricity Regulatory Authority (ERA) and Uganda Electricity Distribution Company Limited (UEDCL) to establish the final buyout cost and submit a report to Parliament before loan approval,” the committee stated in its report.
The committee raised concerns over the government’s proposed loan amount, which stands at $190 million, significantly higher than the $127.66 million Umeme has yet to recover from its investments in Uganda.
Discrepancies in Buyout Figures
The committee’s report highlighted inconsistencies in the estimated buyout cost:
In September 2023, the ERA estimated the buyout cost at $225.75 million, but by March 2025, this figure had dropped to $127.66 million due to additional investments and recoveries from end-user tariffs.
Umeme has invested an estimated $746.798 million, of which $625.22 million has already been recovered, leaving an outstanding balance of $127.66 million.
Umeme initially demanded UGX 864.791 billion ($235.97 million) as compensation, far above the $190 million reflected in the government’s special audit report.
The report further revealed that by the end of the five-year repayment period, Ugandan taxpayers would have paid a total of $235.41 million due to interest and loan servicing costs, making the total repayment cost significantly higher than the borrowed amount.
Opposition MPs Protest Loan Approval
Opposition MPs criticized the government for rushing the loan approval without a clear determination of the final buyout amount. Charles Tebandeke (Bbaale County), in his minority report, supported delaying the loan approval and called for transparency in briefing Ugandans who own shares in Umeme.
“I recommend that the House grants the committee ample time to scrutinize this request in detail. The Auditor General must be allowed to complete his audit to establish the exact buyout figure. Additionally, the committee should visit all Umeme projects. Since Umeme is a listed company, Ugandan shareholders must be informed about the status of their shares,” Tebandeke said.
Denis Oguzu (Maracha County), in a separate minority report, questioned why the government opted to borrow from Stanbic Bank when other financing options were available under Umeme’s licensing agreement. He also demanded an explanation regarding funds in the Escrow Account, which was meant to receive rental payments and other incomes from Umeme.
“In the Lease and Assignment Agreement, an Escrow Account was established where Umeme deposited rental payments and other incomes. To date, no one knows how much is in that account, yet these funds could be used for the buyout instead of borrowing,” Oguzu argued.
He further accused some cabinet members of negligence, alleging that President Museveni had directed officials to begin the buyout process as early as 2022, but they failed to act, leading to the current urgency.
“I have information that the President instructed officials to handle this matter two years ago, but they slept on the job. That is why Parliament is now being rushed to approve this loan,” Oguzu said.
Attorney General Defends Urgency
Defending the government’s decision, Attorney General Kiryowa insisted that the buyout process followed a strict timeline outlined in the agreement with Umeme.
“It wasn’t possible to present this to Parliament earlier because the terms of the agreement dictated the timeline. There is a process to be followed in the buyout,” he stated.
Despite opposition protests, Parliament approved the loan, paving the way for the government to proceed with the buyout. However, concerns remain over the accuracy of the buyout figures and the long-term financial burden on taxpayers.
