By Spy Uganda
Uganda’s controversial buyout of electricity distributor Umeme Limited has raised fresh questions after government secured approval to borrow up to $190.9 million for the transaction, but ultimately paid the company about $126.4 million.
The striking difference between the amount approved, the amount claimed by Umeme and the figure eventually certified by the Auditor General has now put the financing of the multi-million-dollar transaction under fresh scrutiny.
At the centre of the controversy is a simple question: what happened to the more than $64 million between the approved borrowing ceiling and the final amount paid to Umeme?
The issue has emerged as government accounts for the financial arrangements surrounding the March 2025 termination of Umeme’s 20-year electricity distribution concession and the subsequent takeover of operations by the Uganda Electricity Distribution Company Limited (UEDCL).
Permanent Secretary in the Ministry of Energy and Mineral Development, Eng. Irene Bateebe, sought to clarify the figures, explaining that the amount approved was only a borrowing ceiling and not the final amount payable to Umeme.
She said the final payment was determined through an independent verification process conducted by the Auditor General.
But the numbers tell a complicated story.
Umeme initially submitted a claim of $235.98 million to government.
An initial Auditor General’s assessment subsequently placed the potential buyout at $190.9 million.
It was on the basis of that preliminary figure that Cabinet authorised the Ministry of Finance to borrow up to $190.9 million from Stanbic Bank, with Parliament later approving the borrowing.
Yet, when the Auditor General completed the final verification, the figure dramatically fell to approximately $118 million.
Government paid that amount on March 28, 2025, just two days after the final audit report was issued.
Then came another twist.
Further verification of work-in-progress investments made by Umeme between January and March 2025 resulted in an additional $8.4 million payment in June 2025.
The total amount paid therefore rose to approximately $126.4 million.
That leaves a gap of more than $64 million between the borrowing ceiling approved by Parliament and the amount ultimately paid to Umeme.
What Was The $190.9m For?
The government maintains that the buyout was not compensation to Umeme for losing the concession.
Instead, Bateebe explained, it was a contractual reimbursement for capital investments made by Umeme during its 20-year concession but which the company had not recovered through electricity tariffs approved by the Electricity Regulatory Authority.
The arrangement was contained in the Support Agreement signed when Umeme took over electricity distribution in 2005.
The Auditor General was designated as the independent verifier of the investments and was required to assess the company’s financial, technical, legal and environmental claims before the concession expired.
This verification is what ultimately transformed what appeared to be a potential $190.9 million payout into a $126.4 million settlement.
But the controversy does not end there.
The Public Accounts Committee has demanded details showing exactly how much government borrowed from Stanbic Bank, how much was actually disbursed and what happened to any money that was not required for the buyout.
The questions are particularly significant because Parliament had authorised borrowing of up to $190.9 million while the final obligation was substantially lower.
The discrepancy becomes even more striking when Umeme’s original claim is considered.
The company had put forward a demand of $235.98 million, almost $110 million more than what government eventually paid.
The Auditor General’s verification therefore rejected a substantial portion of the company’s claim before government settled the certified amount.
Bateebe said Umeme disputed some of the Auditor General’s findings and maintained that it was entitled to a higher buyout.
The disagreement eventually escalated into arbitration proceedings in London after attempts to resolve the matter amicably failed.
UEDCL has separately commenced arbitration proceedings seeking recovery of money it says Umeme owes government.
Government’s decision to pay Umeme before resolving all outstanding claims has also become part of the controversy.
Bateebe said Uganda could not afford to allow the financial disagreements to interfere with the transfer of electricity distribution operations.
There was also a financial incentive to settle quickly.
Under the concession agreement, delayed payment attracted interest of 10 per cent after 30 days, increasing to 20 per cent for delays exceeding 90 days after the concession expired.
Government therefore proceeded with payment of the amount certified by the Auditor General while leaving the disputed claims to be handled separately.
The Umeme saga is not the only financial issue confronting the energy sector.
The audit scrutiny has also uncovered conflicting records involving more than Shs132 billion linked to the Rural Electrification Levy.
The Ministry of Energy’s accounts reportedly showed a receivable of Shs121 billion that was not reflected in the books of UETCL.
The two institutions have been ordered to reconcile their records and establish the correct financial position.
The developments leave government facing a broader accountability challenge as it settles into the post-Umeme era.
For the Umeme transaction, however, the numbers remain the most intriguing part of the story: a company claiming $235.98 million, government authorised to borrow up to $190.9 million, the Auditor General later certifying about $118 million—and government eventually paying approximately $126.4 million.
The outstanding question is no longer simply how much Umeme was paid, but how the money approved for the buyout was ultimately utilised and whether every dollar borrowed can be accounted for.
