Umeme Moves to Sell Stake to Wealthy Arab Fund

Umeme's distribution network needs a bigger investment

Uganda electricity distributor, visit Umeme, thumb is set to sell a significant stake of its shares to a wealthy Middle East-based Fund known as Egypt Kuwait Holding Company (EKHC).

The anticipated sale comes against the backdrop of the increased cost of electricity that continues to impair growth of Uganda’s manufacturing sector.

In regard to the expected sale, pharmacy Umeme has voluntarily suspended trading of its shares of the stock exchange.

Header advertisement

“In line with its obligations under the Uganda Securities Exchange Listing Rules, 2003, Umeme Limited (the “Company”) informs the public that Umeme Holdings Limited is currently contemplating a sale of its shares in the Company,” Uganda Stock Exchange (USE) said in a statement on Friday.

USE further said if successfully concluded, the transaction may have an effect on the price of the Company’s shares.

USE said in order to facilitate the conclusion of the transaction without disrupting the price of the Company’s shares, Umeme requested to suspend the trading from November 7 up to and including November 15, 2016.

“Any agreement in respect of the transaction will be subject to any necessary regulatory approvals. Shareholders and potential investors are hereby informed,” said USE.

Experts say stock exchange practice all over the world is to suspend trading when a huge chunk of a company’s stock is due to be sold to avoid speculation on the retail market.

Officials said it’s good that Uganda is attracting varied investment from global markets.

Perhaps with deeper pockets, the Kuwaiti fund could pay off the expensive dollar loans borrowed by Umeme to expand the distribution network, thereby reducing financing cost.

The benefits of cheaper financing are ultimately shared between the shareholders and customers.


While the new investment in Umeme may not immediately lead to low power tariffs, officials said the Middle East investors were invited by President Museveni to assist getting cheaper capital into the energy sector which should eventually result in low electricity costs.

Museveni recently said in a speech that by handling electricity, the improved roads and ICT backbone, the country was on the verge of lowering the costs of doing business in the economy, especially in manufacturing.

“The only problem remaining is on account of the high electricity prices caused by the Bujagali power station of 11 American cents.  The power from Nalubaale is US 3 cents because we have finished paying the loans,” said Museveni.

He added: “Recently, in New York, I had a serious discussion with the stakeholders involved in the Bujagali project and agreed on how to bring down the cost of power of that power station.”

The President argued that by a number of measures, the cost of Bujagali electricity can go down to US 7 cents and that thereafter, Uganda can undertake further measures that can lower it further to US 5 cents for, at least, the manufacturers.

“In a manufactured product, electricity accounts for 40 percent and transport accounts for 50 percent (World Bank). Once, therefore, you tackle these two (electricity and transport), you significantly lower the costs of doing business in any given economy,” said the president.


The National Social Security Fund (NSSF) maintains a considerable stake in Umeme, with officials saying the EKHC investment is a vote of confidence in the value and prospects of the company from an independent private investor.

The restored confidence would most likely firm up the value of NSSF investment in that stock for the long term.

“More importantly, NSSF has had difficulty finding quality investment opportunities especially in equities to sink cash for the long term. We haven’t had any IPOs since Umeme,” said a finance expert in Kampala.

“Given the controversial circumstances surrounding the initial purchase by NSSF, the entry of a large middle eastern player as a partner should reassure workers.”

NSSF Managing Director Richard Byarugaba told ChimpReports on Saturday morning that the anticipated transaction does not in any way affect the Workers’ Fund.


EKHO is one of the region’s leading investment companies, with a diversified portfolio of investments that spans the region in sectors that include fertilizers and petrochemicals, energy, cement production, insurance, information technology, transport and infrastructure.

Established in 1997 by a consortium of prominent Kuwaiti and Egyptian businessmen including former Chairman, the late Nasser Al-Kharafi, the company says on its website that it has flourished during the past decade as the countries of the Arab world began to liberalize their economies and open doors for private sector investments in strategic sectors that had once been off limits.

It builds and operates gas distribution networks in Egypt through its 100 percent-owned subsidiary NatEnergy, which covers a wide spectrum of activities, including the transportation of natural gas to power stations and the independent production of power.

The company’s energy investments also include a local and global marine transport of crude oil and petroleum products through ETC.


Header advertisement
To Top