Investors in the cross-listed Ugandan electricity distributor Umeme face a lengthy wait for their payout after the company filed a legal dispute over a lower-than-expected buyout price offered by the Uganda government for a recently ended concession.
Umeme is disputing the payout amount of $118.39 million (Sh15.4 billion) that has been put forward by the government, which is about half of the $234 million (Sh30.35 billion) the company had asked to be paid when handing back the distribution system to Uganda Electricity Distribution Company Ltd last month.
As per the terms of the agreement, the company handed back assets and operations to the Uganda government after an electricity distribution concession it had operated for 20 years ended on March 31, 2025. Private shareholders were to be compensated at the value of unrecovered capital investments plus a premium of five percent.
The firm said on Monday it has now formally served the Uganda government—through its Finance ministry—a notice of dispute about the buyout amount, which if not resolved within a month will see the matter escalated to arbitration in the UK.
“As stipulated in the dispute resolution clauses of the concession agreements, the parties shall attempt in good faith to settle such dispute within 30 days commencing April 11, 2025,” said Umeme in a public notice.
“In the event that no agreement is reached within the 30 days, or such further period as may be agreed upon between the parties, the matter shall be referred to arbitration in London.”
As a result, the suspension in trading in Umeme shares has been extended by a month, at the Uganda Securities Exchange (USE) and the Nairobi Securities Exchange (NSE). Umeme has been cross-listed on the NSE since December 2012.
The two exchanges suspended the stock on March 31 for an initial period of two weeks, citing the ongoing public speculation about the end of the concession and determination of the final buyout amount.
The NSE’s suspension will now run until Monday, May 12, while that of the USE will be in place until Wednesday, May 14.
“This extension follows continued developments regarding the company’s concession with the government of Uganda, and the ongoing process surrounding the final reconciliation of the buyout amount,” said the NSE on Monday.
The Umeme share closed at Sh16 on the last day of trading before suspension (March 28), effectively locking investors in the firm at that price until the buyout matter is resolved.
The company’s proposed buyout price of $234 million (Sh30.35 billion) is equivalent to Sh18.63 per share while the government’s authorised payment of $118.39 million (Sh15.4billion) works out to Sh9.43 per share.
The company’s latest available shareholder register shows that by the end of 2023, it had a total of 6,543 shareholders, out of whom 5,068 had a holding of 10,000 shares or below each.
The top 10 shareholders of the company, who include Uganda’s national social security fund and the World Bank’s International Finance Corporation (IFC), held 1.25 billion shares, equivalent to 76.8 percent of the company’s 1.62 billion issued shares.
