Umeme to Arbitrate in London as Buyout Talks with Government Collapse

After weeks of intensive negotiations, talks between the electricity distribution company Umeme Ltd and the Ugandan government over a post-concession buyout have failed, compelling Umeme to initiate arbitration proceedings in London. The dispute centres on the total amount the government owes Umeme following the conclusion of its 20-year concession.

Umeme’s concession agreement ended recently, and with the government opting against renewal, the company is seeking to recover investments it made but had not yet recouped. While the government has agreed to pay $118 million, and a further $9 million is currently undergoing verification, Umeme is demanding a total of $293 million.

Expressing dissatisfaction with the government’s calculated buyout amount, Umeme formally issued a notice of dispute on April 11, 2025. This led to “good faith negotiations” between the two parties, which commenced on May 2 and ran until May 9, with an agreed extension to May 20, 2025.

However, Umeme has now confirmed that these discussions failed to resolve the significant financial gap. “Although the negotiations were able to resolve and agree on certain amounts as payable and which amounts will be paid by the government after the 31st day of May 2025, no resolution was reached on the payment of Umeme’s entire claim, which stands at the sum of $292 million over and above the admitted buyout amount of USD 118 million already paid by the government,” a statement from Umeme read.

Despite an ongoing audit by the Office of the Auditor General into Umeme’s 2025 investments, which, once admitted and paid, would reduce the claim, Umeme remains resolute in pursuing arbitration. “In the interests of the shareholders and the investing public, the company resolved to and will proceed to pursue the full recovery of all outstanding sums due through arbitration in London as stipulated in the concession agreements,” the company stated.

The process of serving the government with the Arbitration Dispute Reference is reportedly underway and is expected to be completed in the coming days, marking the formal commencement of the arbitration process.

Meanwhile, trading in Umeme Ltd shares on the Uganda Securities Exchange (USE) remains suspended. The involuntary suspension, also affecting the cross-listed shares on the Nairobi Stock Exchange, has been extended for another 12 days, now until June 12.

Umeme’s financial statements for the year ended December 31, 2024, which were delayed due to the extended negotiations, are also expected to be released on June 12. During this suspension, Umeme is committed to complying with all continuous listing obligations and will submit a progress report to the Exchange on the current state of affairs and proposed actions.