* Parliamentary report wants contract cancelled
* Report says Umeme has not fulfilled mandate
* Umeme rejects report's findings
(Adds Umeme comment)
By Elias Biryabarema
KAMPALA, March 28 Uganda's sole power
distributor, Umeme Ltd rejected a parliamentary
report that said it had failed to meet its contractual
obligations and said it was confident the government would not
terminate its contract.
A report by a parliamentary committee set up to investigate
the country's energy sector and adopted by lawmakers on Thursday
asked the government to cancel Umeme's 25-year concession to
distribute power in east Africa's third-largest economy.
The report accused Umeme - also listed on the Kenyan bourse
- of exaggerating its investments and failing in parts of its
Parliamentary resolutions in the east African nation are not
binding on the government.
Umeme said on Friday that it had fulfilled its mandate.
"The objectives of the concession, which included improved
service delivery of electricity to customers, refurbishment of a
dilapidated network as well as the creation of a stronger more
attractive distribution function, have been achieved," Umeme
said in an emailed statement.
"Our position continues to be that the government will not
adopt such recommendations which will discourage private sector
Some analysts have also said the government was unlikely to
jettison Umeme, in part for fear the move would send a negative
signal to potential investors.
"Ultimately I am sure the contract will not be cancelled,"
said Dickens Kamugisha, chief executive officer at the Africa
Institute for Energy Governance, a research and consumer lobby
In a stormy parliamentary session before the report was
adopted, lawmakers accused Umeme of enjoying a deal that is
skewed in the company's favour at the expense of consumers.
They also said the contract was a bad deal since it did not
involve the country's attorney general.
"Umeme must go, they are just profiteering from Ugandans,"
lawmaker John Ken Lukyamuzi told Reuters.
Umeme, controlled by London-based private equity firm
Actis, said earlier this week its pretax profit last year nearly
doubled, helped by a surge in sales and new capital investments.
Profit rose 89 percent to 115.2 billion shillings ($45.23
million) with revenue up 12.3 percent.
The company has said it intends to spend about $440 million
on a capital investment programme running from 2013 through 2018
that it expects to help revamp its distribution network.
Uganda produces about 550 megawatts, while peak demand
reaches about 480 MW, the energy ministry says.
The country's power output capacity is set to get a major
boost around 2017 when the $1.6 billion Karuma hydropower dam on
the River Nile is expected to come into service.
($1 = 2547.0000 Ugandan Shillings)
(Editing by James Macharia and Erica Billingham)