Gov't: We'll Not Terminate Umeme contract


drug geneva; font-size: small; line-height: 200%;”>Parliament last Thursday voted in favor of recommendations by an adhoc committee on energy to immediately terminate contracts of the two companies.

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The report cited a lot of illegalities and manipulation encountered in the procurement of the UMEME concession, unacceptable power losses and the fact that majority of Ugandans today remain off the grid.

Government, however, is progressively standing its ground not to take Parliament’s recommendations into consideration, citing a number of possible devastating ramifications.

Government spokesperson Ofwono Opondo on Saturday morning it was government’s practice to honour its agreements with private entities and reassured that it would stick to that.

“While we take parliament’s concerns with respect, at this time it’s not under consideration to terminate the contracts.”

Opondo noted further that this after all was not the first ‘bad contract’ to be signed by government: “Not too long ago there was the issue of Stanbic bank, where very one was urging for restoration of UCB, but the president and the executive stood firm and now Stanbic is serving Ugandans far much better all round.”

He further said the committee of parliament was not technically apt and enlightened enough to take such a decision involving such a big sector.

On the spot, UMEME Managing Director Mr Charles Chapman warned on a radio talk show that getting rid of his company would be a disaster to the electricity sub sector in the country.

“Politics is filled with emotions, and doesn’t mix with long term investments like utilities. Politicians make daily decisions and are in office for 4 years, on the other hand have 20-year contracts to plan for.”

He went on to discredit the Committee’s report as ‘outdated’ having been finalized in October 2012 when many changes have happened in the sector.

While the report accused UMEME of failing to keep power losses below 27 percent, Mr Chapman noted that today the company had managed to bring down the losses to 20 percent and would soon overtake Kenya’s which stands at 19 percent.

“I would love to work with government and parliamentarians who look forward, but I cannot answer for things that happened years ago.”

The report, he said, had been greatly manipulation and that UMEME tried to bring this to the attention of the committee chairperson but there was no response.

Citing many irregularities in the report, Mr Chapman said he was willing to pay parliament USD 1million to get an independent person verified by the World Bank and other international bodies to make an assessment on the company’s performance.

Meanwhile, during the Thursday plenary, Prime Minister Hon Amama Mbabazi said that government would need to seek further advice from the Attorney General.

The AG however had earlier advised cabinet to disregard the committee’s report noting that terminating UMEME’s contract would have serious legal, financial and investment consequences to the nation.

The same warning was sounded today by famous business consultant Dr William Kalema, that such a move would greatly discredit the country’s investment ratings internationally, especially now that government is looking for financial partnerships for other projects like dams, roads and other infrastructure.

“It is always possible to renegotiate the contract, but if you repudiate it, we’ll never have confidence again from any other credible investors willing to partner with us.”

As the battle lines get drawn, it will be recalled that Parliament has rarely won in a contest with the president and executive.


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