Parliament has intensified scrutiny of one of the country’s most significant energy sector transactions, summoning officials from the Ministry of Finance, Planning and Economic Development to explain discrepancies surrounding the financing of the government’s buyout of electricity distributor Umeme Limited.
The Public Accounts Committee (PAC) issued the directive after hearing detailed testimony from the Permanent Secretary in the Ministry of Energy and Mineral Development, Eng. Irene Bateebe, who traced the complex sequence of events leading to the conclusion of Umeme’s 20-year electricity distribution concession in March 2025 and the subsequent government acquisition of the utility’s unrecovered investments.
At the centre of the inquiry is the apparent gap between the USD 190.9 million (about Shs710 billion) borrowing approved by Parliament and the approximately USD 126.4 million ultimately paid to Umeme following completion of the mandatory audit process.
Committee Chairperson Patrick Oshabe Nsamba said Parliament must establish how much government actually borrowed from Stanbic Bank, how much money was disbursed and what became of any unutilised funds.
“We have received several Auditor General’s reports relating to the Umeme concession. Tomorrow, we shall dedicate our sitting to exhaustively interrogate the entire buyout process,” Nsamba said.
The committee directed the Ministry of Finance to appear before it with detailed records of the borrowing arrangement, loan disbursements and utilisation of the approved funds.
Bateebe told legislators that the buyout was neither compensation nor a negotiated settlement, but a contractual reimbursement for capital investments that Umeme had made over the concession period but had not recovered through electricity tariffs approved by the Electricity Regulatory Authority (ERA).
“The buyout amount was largely that amount where Umeme had invested and over that period had not recovered. It wasn’t compensation,” she explained.
The arrangement stems from the Support Agreement signed when Umeme assumed the electricity distribution concession in 2005. Under the agreement, the Office of the Auditor General (OAG) was designated as the independent verifier responsible for determining the final buyout value through comprehensive financial, technical, legal and environmental audits before expiry of the concession.
According to the Ministry of Energy, the Auditor General commenced the verification exercise in April 2024, nearly one year before the concession expired.
An initial draft audit report released in January 2025 estimated the buyout at USD 190.9 million, while Umeme independently submitted a significantly higher claim of USD 235.98 million to the Ministry of Finance.
On the strength of the Auditor General’s preliminary findings, Cabinet authorised the Ministry of Finance to borrow up to USD 190.9 million from Stanbic Bank to finance the buyout. Parliament subsequently approved the borrowing in March 2025, with the understanding that payment would be based solely on the Auditor General’s final certified figure.
However, subsequent verification exercises substantially revised the amount downward. The Auditor General’s final report, issued on 26 March 2025, certified the buyout at approximately USD 118 million (about Shs441 billion). Government settled the verified amount two days later.
Bateebe further revealed that the Auditor General later undertook additional verification of work-in-progress investments completed between January and March 2025, resulting in an extra USD 8.4 million payment, which government settled on 30 June 2025.
She attributed the difference between Parliament’s approved borrowing ceiling and the eventual payout to the evolving audit process, explaining that reconciliation of investments continued until the concession formally ended.
The ministry also defended government’s decision to pay Umeme before recovering outstanding obligations owed by the company, arguing that offsetting disputed claims could have disrupted the orderly transfer of electricity distribution operations to the Uganda Electricity Distribution Company Limited (UEDCL).
According to Bateebe, Umeme contested several findings of the Auditor General and maintained it was entitled to a significantly higher buyout value than government had certified.
Government therefore opted to complete the concession handover before pursuing disputed claims separately.
Efforts to resolve the disagreements amicably later collapsed, prompting Umeme to commence arbitration proceedings in London in accordance with the Support Agreement. UEDCL has likewise initiated separate arbitration proceedings seeking recovery of amounts it contends Umeme owes government.
The Permanent Secretary further warned that delaying payment would have exposed Uganda to substantial financial penalties under the concession agreement, including interest charges of 10 per cent after 30 days and 20 per cent for delays exceeding 90 days following expiry of the concession.
Despite those explanations, lawmakers insisted that accountability extends beyond the final buyout figure.
PAC members argued that while the audit may have reduced the certified amount payable, government must still fully account for every shilling associated with the loan approved by Parliament.
Their inquiry reflects Parliament’s constitutional oversight mandate under Articles 90 and 164 of the Constitution, which empower parliamentary committees to scrutinise government expenditure and require the Auditor General to audit and report on the use of public resources.
The committee is also exercising powers under the Public Finance Management Act, 2015, which demands transparency, prudent borrowing and accountability in the management of public finances.
The lawmakers’ concerns underscore broader questions about public debt management and fiscal discipline, particularly where borrowing approvals exceed eventual expenditure. The committee’s scrutiny extended beyond the Umeme buyout.
PAC also ordered the Ministry of Energy and Mineral Development and the Uganda Electricity Transmission Company Limited (UETCL) to reconcile conflicting financial records after legislators uncovered inconsistencies involving more than Shs132 billion linked to the Rural Electrification Levy.
The issue emerged during examination of the Auditor General’s report, which revealed that the Ministry of Energy’s financial statements reflected a receivable of Shs121 billion that did not appear in UETCL’s books.
Lawmakers directed both institutions to reconcile the conflicting figures and establish the actual financial position before the committee proceeds with its audit review.
The twin inquiries underscore Parliament’s growing determination to tighten oversight of Uganda’s energy sector at a time when government is implementing major electricity reforms following Umeme’s exit and expanding investments aimed at achieving universal access to electricity under the country’s long-term development agenda.
For PAC, the central question remains straightforward: whether every dollar Parliament authorised for the Umeme buyout can be fully traced, accounted for and justified in accordance with Uganda’s public finance laws.
