KAMPALA, Uganda – Umeme, Uganda’s listed power distribution company, is pursuing a $292 million (about 1.1 trillion Ugandan shillings) compensation claim against the government in international arbitration in London, England.
The core of the heated dispute revolves around the final buyout amount for Umeme’s investments, with the company claiming the government’s calculation methodology is inconsistent with the concession agreement. The resolution terms of Umeme’s 20-year contract specify that any international arbitration between the parties must occur in London and is legally binding.
Umeme Managing Director Selestino Babungi said initial “good faith negotiations” with the government failed to reach a mutual agreement by May 20, 2025.
“We are ready and that is why we notified the Government,” Babungi said. “They will be served with all the relevant documents as laid out in the agreement to ensure that we can conclude on the arbitration process.”
Umeme stated that pursuing arbitration aims to protect investor interests and uphold contractual agreements. The company’s shares are split, with 40% held locally and 60% by international investors. Roughly 25% of any awarded sum would go to the National Social Security Fund (NSSF), its largest shareholder, with another 15% distributed among other local shareholders.
Allan Rwakakooko, Umeme’s head of legal services, said the duration of the arbitration will depend on factors including the volume of information to be reviewed and the arbitrator appointment process.
While Umeme seeks a swift resolution, the company said it cannot offer a specific timeframe because the precise schedule will be established during the initial meeting once arbitration formally begins and will depend on both parties.
“We will not speculate, but it is something where, when you start the arbitration process, the very first meeting sets out the timetable,” Rwakakooko said.
The company now estimates its overall outstanding claim for the concession at about $292 million, after a partial payment of $118 million (about 427 billion shillings) by the government in March.
“As of March 31, we gave estimates because we had not closed the period of reconciliation with what we can call the final buyout amount. That is why we have this rise in the total claim now standing at $292 million. No interest has been applied on the final amount,” Babungi said.
This week, the Uganda Securities Exchange (USE) extended the suspension of Umeme shares from trading until June 12 as the company continues its dispute with the government.
Paul Bwiso, the chief executive officer of the USE, said suspending trading aims to prevent volatility, market manipulation and safeguard the company’s value until relevant information is provided to all investors.
“We wanted to make sure information was passed and managed effectively. We were all caught off-guard by $118 million paid by the Government. Umeme has been top notch in terms of financial reporting,” Bwiso said. “We will only reopen the counter and investors will make decisions based on the information they have. In two weeks, there will be another announcement.”
The ongoing dispute has also impacted Umeme’s financial reporting. The valuation of the company’s assets is linked to its financial statements, which has led to a delay in publishing its results and holding its annual general meeting.
