Umeme Limited, a company listed on both the Nairobi and Uganda Securities Exchanges, has issued a profit warning for the six months ending 30 June 2026. The firm anticipates recording a financial loss, marking the second consecutive half-year period of losses since it relinquished its electricity distribution concession in Uganda.
The 20-year concession ended on 31 March 2025, leading to a complete halt in operating revenue as control of the distribution network transferred to Uganda Electricity Distribution Company Limited (UEDCL), a state-owned entity.
Dispute Over Compensation
Under the terms of the concession, Umeme was entitled to compensation for unrecovered capital investments. However, the parties have been unable to agree on the amount. Uganda's Auditor General valued the buyout at US$118.4 million, a figure accepted by the government but rejected by Umeme as insufficient.
Following unsuccessful negotiations, Umeme submitted a compensation claim totaling US$410 million. The Ugandan government has paid US$118 million, prompting Umeme to seek an additional US$292 million through international arbitration in London.
Financial Consequences
- For the six months ending June 2025, Umeme reported a net loss of UGX 166.7 billion (approx. KSh 21.6 billion), a sharp decline from a net profit of UGX 13 billion the previous year.
- Revenue dropped to UGX 503.5 billion, less than half of the UGX 1.15 trillion recorded in the first half of 2024.
- Total assets decreased from UGX 1.39 trillion to UGX 590 billion.
Trading of Umeme shares has been suspended on both the Nairobi Securities Exchange and the Uganda Securities Exchange since 31 March 2025, pending resolution of the arbitration and related regulatory matters.
The company has committed to providing further updates on its financial position when it releases interim results for the period ending 30 June 2026. Any potential settlement or arbitration award will be accounted for as a non-operating, one-off item with uncertain timing and value.
