Government has offered a 10 per cent return on investment (ROI) in the ongoing negotiations in which power distributor Umeme is seeking a new concession.
Umeme’s current 20-year concession expires in 2025.
Multiple sources close to the matter, who preferred anonymity due to the sensitivity of the negotiations, said government has put a 10 per cent offer on table, which will be a revision from the 20 per cent under the current concession.
“The return on investment government is offering is 10 per cent. We are negotiating. It is not a take it or leave it case. The rate of return is among the issues being negotiated so it is still on until we conclude,” the source said.
Umeme is currently operating under a 20-year lease and assignment agreement, in which it manages assets of Uganda Electricity Distribution Company Limited until 2025.
While most of the tenets of the new concession have been determined, the return on investment and duration of the new concession subsections continue to be contentious, dragging the negotiations for months.
The negotiations, sources say, had gained momentum before elections but were put on hold during the campaign season because some of the negotiators were involved in the election process in one way or the other.
Sources, however, said that even while it is a negotiation, government seems to have no sentiment towards awarding a much higher return on investment beyond the 10 per cent.
Government has in the past been criticised for negotiating a concession that some Ugandans have said put the country in an awkward position with most remedies in case of a dispute working in favour of Umeme.
The 20 per cent return on investment, among other factors, has been and remain a key concern over the concession period.
However, government has over the years justified the agreement, saying the conditions under which Umeme inherited the distribution subsector were dire.The distribution network, government has previously said, which was characterised by a dilapidated infrastructure, among others, offered very little advantage on which it could negotiate a better deal.On the duration, government is offering the power distributor 15 years of added operationsHowever, sources said, Umeme is asking for more.“Government is offering 15 years and of course Umeme wants as high as they can get. Umeme wants 18 more years,” the source said.However, Daily Monitor could not independently verify the proposed offers.The negotiations are bound to a period not exceeding 20 years as spelt out in […]
