Umeme blames high power tariffs on government agencies

Umeme Uganda Ltd, the electricity vending company is withholding more than Shs 153.4bn it is supposed to remit to Uganda Electricity Transmission Company Limited (UETCL) over unpaid bills by government agencies.

About 84 government agencies have failed to clear their outstanding power bills with Umeme despite the fact that money is allocated to the government agencies in question every financial year to cater for their electricity consumption.

Secretary to the treasury Keith Muhakanizi while appearing before the COSASE committee

The company’s chief corporation and regulations officer, Blessing Nshabo told members of Parliament’s Committee on Statutory Agencies and State Enterprises (COSASE) that given the reluctance of the government agencies to clear their bill, Umeme was forced to invoke Section 5.3 (d) of the company’s agreement with government that allows the company to defer payments to UETCL once government fails to pay, until the bills are cleared.

Umeme appeared before the Committee together with officials from Electricity Regulatory Authority (ERA), Uganda Electricity Transmission Company Limited (UETCL) and Rural Electrification Agency (REA) to respond to queries raised in the Auditor General’s report for the year ending June 30, 2016 which indicated that UETCL owed REA Shs 61.5bn which accumulated over five years after UETCL failed to make the annual remittances of 5% of the transmission levy.

From the money that Umeme withheld, it has been able to recover Shs 58.8bn which has reduced the debt to Shs34.89bn.

“There are no funds available to pay UETCL because not only was the money insufficient to pay [but] we are still owed money by the government,” Nshabo said.


With government set to re-negotiate the Umeme concession agreement, committee members said expressed a desire to be part of the process to review the agreement which is said to favour Umeme and unfair to Uganda.

In a March 18 letter to the Minister of Energy and Minerals Irene Muloni, President Yoweri Museveni ruled out the option of renewing the Umeme agreement which expires in 2025, and also directed the Inspector General of Government Irene Mulyagonja to investigate the controversies surrounding the Umeme concession which are  responsible for the high electricity tariffs.

UMEME officials appearing before the COSASE committee on Thursday.

IntelPost understands that Museveni has since got a change of heart, and a motion that had been planned to be tabled in Parliament to effect was mysteriously withdrawn.

Before COSASE, Umeme confirmed that the review process of their concession agreement is ongoing for which Katuntu said that it the right time for Parliament to interest itself in the review of the agreement so as to cater for the government interests.

“Whoever negotiated this agreement, I don’t know which law school they went to; it is an agreement that is risk free for Umeme because the contracting party is the one collecting money on behalf of Umeme. No reasonable commercial lawyer would be in position to negotiate such an agreement, unless he has interests. That agreement is risk free for Umeme because they have all legal safe guards, it is only government that didn’t protect their economic safeguards,” Katuntu said.