The Ministry of Finance warned Parliament this week that if the US$190,988,565 (UGX696.621 billion) loan for Umeme Limited’s buyout is not provided by the end of February 2025, Uganda will face significant interest payments.
According to the Ministry, the interest rate on the buyout amount will be 10% for 30 days.
Furthermore, if the buyout amount is not paid within 46 to 90 days, the interest rate will increase to 15%, and if the money is not paid after 91 days, the interest rate will be 20%.
Henry Musasizi, Minister of State for Finance, made the revelation during an appearance before Parliament’s National Economy Committee.
Musasizi stated that timely payment of the buyout amount will ensure a smooth transition and transfer of distribution network assets and operations to Uganda Electricity Distribution Company Limited (UEDCL).
“This financing should be made available by the end of February 2025. If payment of the buyout amount is delayed, the government shall pay interest to Umeme Limited on any outstanding portion of the buyout at the rate of 10% per year for the period of 30 days to 45 days after the end of the natural term,” he explained.
Musasizi emphasized that a 15% payment will be made from 46 days to 90 days after the end of the natural term, followed by a 20% payment after 91 days, until the government pays the buyout amount in full.
Migadde Robert, Buvuma Island MP, stated, “This is one of the most difficult requests we have received. If you look at the terms, grace period, tenure, and the period you are targeting, today is the 25th, and you are saying the end date is February 28th, 2025, then when you look at the other areas with percentages, I am not sure who makes such agreements.”
Migadde wondered if there was an Auditor General’s report confirming this (US$190 million).
Allan Atugonza, MP for Buliisa County, also chastised the government for bringing a loan to Parliament with tight deadlines, claiming that the decision was deliberate on the part of some government officials.
These individuals, he said, are responsible for ensuring that Umeme’s concession is extended if the payment deadlines are not met.
“These people have set us up for failure, they don’t want Umeme to go when someone brings a proposal with a deadline of three days obviously that is a setup and failure to honour…you can clearly see someone setting up this process for failure,” he added.
“Because you know the process of approval but in three days, you are pushing us hurriedly to approve and they know it isn’t possible,” remarked Atugonza.
The Minister of State for Energy, Opolot Okaasai on February 25 did clarify to the Committee that the money will have to be paid by March 31, 2025.
If the government fails, he said, the penalties will kick in.
“The date for payment is not February 28, 2025. We have up to March 31, 2025 to pay; it is only March 31 that we shall pay the penalty.
“Therefore, we request the Committee to consider this loan, we still have time to pay this loan in time to avoid the interest that the Minister highlighted,” said Minister Okaasai.
Hassan Kirumira, MP for Katikamu South, questioned whether the government expected Parliament to work like donkeys just to approve the loan.
“Umeme’s contract is running out this month and possibly this explains the rush, they have woken up and they can see there is loot, they don’t want to miss out on the loot and they want to use our Committee to rubber stamp that particular route.”
Between now and the contract’s expiration date of February 28, 2025, Kirumira stated, “We (the Committee) can not work like donkeys to process the loan in three days and that loan is passed by Parliament. I think this loan before us is a stillbirth, there is nothing we can do about it.”
The government decided to show UMEME an exit door and they must now dig deeper into “their pocket” to send the company out with a huge package.
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