By John Kusolo
Kampala, Uganda – The Managing Director of Uganda Electricity Distribution Company Limited (UEDCL), Paul Mwesigwa, recently appeared before the Committee of Commissions, Statutory Authorities, and State Enterprises (COSASE) to discuss the company's preparedness for the upcoming takeover from Umeme, Uganda’s largest electricity distributor. This follows the announcement that Umeme's contract will expire in March 2025, necessitating a significant workforce expansion and infrastructure investment by the government.
During the meeting, Mwesigwa announced that over 3,000 new workers will be required to manage the electricity sector post-Umeme's exit, with a priority given to the current employees of Umeme. "Umeme’s contract is expiring next year. How prepared are you?" inquired Abdallah Kiwanuka, Member of Parliament for Mukono North. "We need to understand how you are handling this transition to avoid any dilemmas. The people currently working there are uncertain about their future, and we need clarity."
Mwesigwa provided reassurances, detailing that although Umeme is the largest distributor UEDCL will take over, several smaller distributors have already been integrated into the government workforce between 2017 and 2024. "This year, we took over a distributor in Kyegegwa and Kayunga. We engaged all the staff, interviewed them, and those who qualified joined us. The same plan is in place for Umeme," he explained.
Currently, UEDCL operates with 490 staff members, but their business model will require an expansion to 3,010 employees to efficiently manage Umeme's operations. Umeme’s workforce consists of 2,502 employees, and UEDCL intends to engage all of them, providing interviews and potential appointments within the company.
In February 2024, Parliament was informed of the government's plan to borrow US$765.75 million (UGX2.812 trillion) from external lenders to finance Umeme’s exit. The estimated buyout amount due to Umeme is US$225.75 million (UGX 859.430 billion). Additionally, UEDCL requires US$540 million (UGX 2.051 trillion) for initial investments, including US$190 million needed during the takeover process and US$70 million (UGX 257.142 billion) annually for the next five years.
Mwesigwa emphasized that the transition period has been ongoing for three years and is now in its final stages. "We are handling the final details, and by the transition day, everything will be cleared on the side of the government and Umeme," he stated. Plans to invest US$70 million in the network, excluding new connections, are in place, and discussions with financial institutions are ongoing to secure favorable loans.
During the meeting, legislators expressed concerns about the decline in service quality by Umeme ahead of their exit. Reports of delayed transformer replacements and infrastructure issues were highlighted. Gerald Nangoli, Member of Parliament for Elgon North, noted that Umeme requires a minimum of 35,000 registered electricity users before replacing a faulty transformer, disadvantaging rural areas.
Kiwanuka attributed delays in replacing key infrastructure to Umeme’s reluctance to invest ahead of their exit, saying, "As Umeme’s agreement with the government draws to a close, they are reluctant to invest in infrastructure. The agreement required them to reinvest, but they are now holding back. How are you planning to address the issue of infrastructure vandalism, which has left many areas in total blackout?"
Mwesigwa acknowledged these challenges, attributing the decline in service quality to limited capital access and Umeme's need to control costs. However, he assured MPs that these concerns have been raised in monthly transition meetings. "In our meetings with the regulator, we discussed the quality of service as Umeme’s concession ends. Financiers may be reluctant to provide funds to Umeme, and they need to control costs. However, they have shown a willingness to continue providing services until the transition is complete," he said.
As Uganda prepares for this significant transition in its electricity distribution sector, the government's efforts to ensure a smooth takeover and improved service delivery will be closely watched. The integration of Umeme's workforce and the substantial financial investments required highlight the scale of this endeavor, aimed at enhancing electricity access and reliability across the country.
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