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Govt, Umeme sued over contract

A Ugandan citizen has dragged the government and Umeme to the High court, contesting the manner in which the power distribution company got its concession in 2004.


Rashid Kigemuzi claims that on November 26, 2006, the government and Umeme, through some prominent persons, illegally and fraudulently increased the loss cap from 33 per cent to 38 per cent, for purposes of compensation.

Through Balondemu, Candia and Wandera Company Advocates, Kigemuzi claims that since 2004, Umeme has falsified its levels of investment in the distribution sector.

It has, he argues, claimed to have invested Shs 32bn, yet the real investment has not exceeded Shs 16bn.

“The plaintiff [Kigemuzi] shall contend that the concession agreement is contrary to public policy as far as it inhibits government’s right to terminate the agreement. It renders government liable to compensate Umeme for its own default. And it also erodes government’s qualified and absolute sovereignty over national assets,” the plaint reads.

Kigemuzi argues that during the tendering process, Umeme was not among the six bidders, since it had not yet been incorporated – only to be given a 20-year lease on May 17, 2004, eleven days after its incorporation.

He says that during the drafting of the concession, the government hired Hutton and Williams as well as Shonubi, Musoke and Company Advocates, as external and internal transaction advisors respectively. But at the time the concession was signed, Kigemuzi says, the latter were directors in Umeme. To date, they continue to be the company’s external legal advisors – a case of conflict of interest.

He contends that the power distribution concession is illegal, since the attorney general was not the one who drafted it on behalf of government but, rather, a private legal firm.

Kigemuzi, who accuses government for deliberately ignoring a parliamentary resolution to have the concession terminated, wants court to nullify it. He wants court to order Umeme to refund all monies it has “fraudulently” got as compensation through“falsified losses”.


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