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Umeme Share Trading Ban Extended for a Month Over Buyout Dispute
Kampala, Uganda | THE INDEPENDENT & URN | Former Uganda electricity distributors Umeme has officially disagreed on a buy out amount of $118million given to them by government. They earlier stated they had expected to be paid $234, and if matter is not resolves in next 30 days, will be seeking arbitration on the matter in London.
Umeme was compelled by the government of Uganda to handover the distribution system to the UEDCL on March 31 – the end of the concession term – before the matter could be settled.
“Umeme disputed, among several things, the audited figure in the OAG’s report and has informed the government of Uganda, that the company will issue a formal Notice of Dispute in accordance with the terms of the Section 9.1 of the Support Agreement,” Umeme had promised last month.
Yesterday, Umeme made a public communication on its formal disagreement with the payout amounts and the company’s intention to seek arbitration.
“In accordance with clauses 9. I and 9.2 of the Support Agreement entered between Umeme Limited and the Government of Uganda, and pursuant to the resolution of its Board of Directors, Umeme has identified and formally declared a dispute in respect of, inter alia, the Buy Out Amount payable to the Company,” a company statement said.
The Notice of Dispute was served on the Government of Uganda, represented by the Ministry of Finance, Planning and Economic Development, on April 11, 2025. Quoting the dispute resolution clauses of the Concession Agreements, Umeme said, “the Parties shall attempt in good faith to settle such Dispute within thirty days commencing from the I Ith day of April 2025,” it said.
The Agreement further provides that in the event that no agreement is reached within the thirty days, or such further period as may be agreed upon between the parties, the matter shall be referred to arbitration in London. The statement issued by the company secretary, Shonubi, Musoke & Co Advocates, advised the public to “exercise caution if and when trading in the Company’s shares and to seek appropriate professional advice.”
Meanwhile, Umeme Ltd shares will not be trading on the Stock market for a further month over a payment dispute with the government. Trading activities on the Umeme counter were first suspended on Monday, March 31, 2025, following the expiry and non-renewal of its electricity supply, sale, and distribution concession by the government.
It was hoped that this would be enough time to settle all matters regarding the transition and ensure that the market was not disrupted, especially regarding the payout amounts. This has not been the case, and the Uganda Securities Exchange (USE) has extended the suspension for an additional period of thirty days to Wednesday, May 14, 2025.
The involuntary suspension of the counter by the USE was aimed at maintaining transparency of the market, and minimising the effect on the market of the ongoing speculation which would other affect pricing. The government had by that time paid Umeme 118 Million Dollars, with another 9 million in claims still undergoing verification, while the company said its investments yet to be recouped amounted to more than $243 Million.
USE says the extension of the suspension is aimed at further protecting current and prospective investors from the likely effects of the development on the shares. “The extension of the suspension is intended to allow for good faith settlement of the dispute between the two parties as per the Concession Agreements, failure of which, the matter shall be referred to arbitration in London.”
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