Umeme Limited

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In May 2004, the government of Uganda granted a 20 year concession contract to Umeme Limited to operate and manage the electricity distribution in Uganda from the Uganda Electricity Distribution Company Limited (UEDCL), the state-owned distributor. Umeme leased the existing distribution network from UECDL, except for the rural electrification schemes which remained under UECDL. The new distribution company had to purchase power from the Uganda Electricity Generation Company Limited (UEGCL, operated by Eskom under a concession contract). The distribution network covers roughly 40% of Uganda, and provides service to approximately 250,000 customers. Umeme Limited took over management of electricity distribution in Uganda On March 1 2005. Umeme Limited was jointly owned by Eskom Enterprises Ltd (44%, South Africa) and Globaleq (56%, UK). The concession contract was part of electricity reforms in Uganda. In 2001, the Uganda Electricity Board (UEB) was split into three parts - UEDCL, UEGCL and the Uganda Electricity Transmission Company Limited (UETCL) after a concerted effort in 1999 to make UEB profitable to prepare for privatization. Umeme agreed to pay the government a US$ 1.4 million transaction fee and an annual rental fee (initially US$ 18 million) for use of UEDCL’s assets for the 20-year period of the concession. Under the concession contract, Umeme was required to invest a minimum of US$ 65 million by 2010 to improve the network infrastructure and billing systems, though Umeme expected to invest US$ 100 million over this period. Umeme was also required to make a minimum of 20,000 new connections per year until 2010, and then 25,000 new connections per year thereafter. Miga granted a 20 year US$40.5 million in guarantees to Globeleq Ltd. of Bermuda and Eskom Enterprises (Pty.) Ltd. of South Africa covering their $45 million equity investment in, and shareholder loans to, Umeme Ltd. of Uganda.