Shares of Umeme Limited resumed trading on the Ugandan and Kenyan stock exchanges on Friday, offering an opportunity for investors to exit amid uncertainty over the amount of compensation the former electricity distributor will receive from the Kampala government.
Umeme’s shares were suspended from March 31 – the day when it handed over its assets to Uganda Electricity Distribution Company Limited, even as it received a smaller payout of $118 million (Sh15.2 billion) from the government at the end of its 20-year concession.
Umeme’s shares Friday hit highs of Sh16, which is the same level it previously traded at on March 28.
The company now says it is going to seek an additional compensation of $292 million (Sh37.7 billion) from the Ugandan government through an arbitration process in London.
The lower-than-expected payout saw Umeme skip a final dividend for the year ended December 2024, when it also sunk into a net loss of Ush510.5 billion (equivalent to Sh18.2 billion at current exchange rates).
“As communicated in the public notice … the company is seeking to recover the balance of the outstanding buyout amount payable to it in the sum of $292 million plus contractual interest, through the international arbitration route,” Umeme said on Friday.
“The board and management are committed and fully focused on this recovery process to ensure the preservation and protection of the interests of the company and its shareholders.”
The arbitration process in London could take up to 20 months to conclude, indicating a potentially lengthy wait for investors keen on receiving a maximum payout from the Ugandan government.
Umeme closed the year ended December 2024 with a book value equivalent to about Sh5.3 per share, meaning that the shares are trading at a much higher price than what the company is worth.
The financial position of Umeme is, however, expected to change depending on the additional payouts it may receive.
“Expected credit losses increased to Ush361 billion (Sh12.9 billion) … mainly due to accounting provision on other financial assets because of a highly conservative decision taken by the company in accordance with IFRS Accounting Standards,” the company said.
“The company resolved to recover this amount through the arbitration process to be conducted in London, United Kingdom.”
Umeme’s biggest shareholders include Uganda’s National Social Security Fund with a 23.4 percent stake, South African asset manager Allan Gray (14.82 percent) and the International Finance Corporation (2.78 percent).
The company had expected to be paid its entire claim by the last day of the concession on March 31.
Ahead of its listing in 2012, the company had warned investors of the risk of a lower-than-expected compensation at the end of the concession due to government sabotage.
