UMEME, a South African Power Utility firm has warned the government of Uganda against the contract cancellation move.
Speaking to the Media, the institution’s Managing Director, Selestino Babungi that terminating the contract will instead bring on table discussion around over $500m or approximately 1.8 Trillion shillings in compensation.
He also reveals their running investments worth $100 (360B) must generate benefit instead of a termination.
Balungi adds that the contentious issue of power tariffs and associated drawbacks on losses that prompted a meeting with President Yoweri Museveni on Tuesday, will be addressed through cheaper generation, transmission and distribution costs by players in the energy mix.
Museveni Last week ruled out renewing electricity distributor Umeme’s contract, saying Uganda should instead look for “a cheaper way of modernizing and expanding the distribution and distribution lines”.
In a March 12 letter blocking the renewal of the concession, at least for now, the President directs Energy minister Irene Muloni, who has in the past defended Umeme, to explain why, despite Umeme’s investment in the network, energy losses are high.
Distribution energy losses are now at 17.2 per cent, down from 19 per cent two years back. Mr Museveni seems to suggest Umeme should have eliminated technical losses altogether.
Umeme’s power distribution concession is due to expire in seven years (March 2025). According to the law regulating the power sector, a concessionaire can, three years to the expiry of its concession, apply for a renewal. Umeme had expressed interest in having it extended