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Henry Musasizi, the Minister of State for Finance, while appearing before Parliament’s National Economy Committee
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Gov’t Risks Heavy Penalties Over Umeme Buyout Loan Delay
The Ministry of Finance has warned Parliament that failure to secure the US$190,988,565 (UGX 696.621 billion) loan for Umeme Limited’s buyout by the end of February 2025 will attract hefty interest penalties. The government would be required to pay an interest of 10% on the buyout amount within 30 days, 15% if delayed between 46 to 90 days, and 20% if the payment extends beyond 91 days. This revelation was made by Henry Musasizi, the Minister of State for Finance, while appearing before Parliament’s National Economy Committee. He emphasized that the timely payment of the buyout amount is crucial for a smooth transition of Uganda’s electricity distribution network from Umeme Limited to the Uganda Electricity Distribution Company Limited (UEDCL).
“This financing should be made available by the end of February 2025. If payment of the buyout amount is delayed, the government shall pay interest to Umeme Limited on any outstanding portion at the rate of 10% per year for the period of 30 to 45 days after the end of the natural term, 15% for 46 to 90 days, and 20% for any period beyond 91 days until the full payment is made,” Musasizi stated.
However, the Minister of State for Energy, Opolot Okaasai, clarified that the actual deadline for payment is March 31, 2025, and penalties would only apply if the government fails to meet this deadline. “The date for payment isn’t February 28, 2025. We have up to March 31, 2025, to pay. It is only after March 31 that penalties will be incurred. Therefore, we request the Committee to consider this loan, as we still have time to process and approve it in order to avoid these penalties,” Minister Okaasai explained.
Minister Okaasai (Parliament Photo)
Lawmakers, however, expressed concern over the rushed nature of the loan request. Hassan Kirumira (Katikamu South) questioned whether Parliament was expected to hurriedly approve the loan without proper scrutiny.
“Umeme’s contract is running out this month, and this seems to explain the urgency. They have woken up late, realizing there’s a big loot at stake, and they want to use our Committee to rubberstamp their plans. With just three days before the contract expires on February 28, 2025, we can’t be expected to process and approve this loan like donkeys. This loan before us is a stillbirth,” Kirumira asserted.
Similarly, Allan Atugonza (Buliisa County) accused the government of setting Parliament up for failure by presenting a loan request with unrealistic deadlines, hinting at a possible ploy to extend Umeme’s concession.
“These people don’t want Umeme to leave. When you bring a proposal with a three-day deadline and impose penalties of 10%, 15%, and 20% within 30, 45, and 90 days, it’s clear that the process is being set up for failure. They know the approval process, yet they expect us to rush through it. This is deliberate,” Atugonza remarked.
Allan Atugonza
Other MPs, including Migadde, also questioned the terms of the loan, highlighting concerns over the grace period, interest rates, and the estimated borrowing amount. They called for an Auditor General’s report to confirm the US$190 million valuation before any approval is granted.
With only days left before the contract expires, Parliament faces pressure to either approve the loan or risk incurring penalties that could further strain the national budget.
Torch Media Africa
