Museveni assures Ramaphosa on Eskom smooth exit, support for South African investments in Uganda

President Ramaphosa has expressed South Africa’s gratitude to his Ugandan counterpart President Yoweri Museveni for Uganda’s steadfast support to Eskom in its operations in Uganda since 2003. According to Ramaphosa, Eskom’s very successful 20-year concession, which ends on 31 March 2023, symbolises the strong economic relations between South Africa and Uganda.

Eskom Uganda Limited, a subsidiary of Eskom South Africa has been operating Kiira and Nalubale power dams during the concession. The two dams contribute 280 megawatts to the national grid and had been contributing a big portion of the electricity generation capacity before Bujagali and Isimba dams were operationalized.    

As Eskom exits, some of the assets will now be handed over to the Uganda Electricity Generation Company (UEGCL), which says there is a transition plan that includes the absorption of local employees. According to the company, the concession envisaged a time like this and made a provision in the agreement of the key steps that need to be taken by both parties to smoothly transition from one party to the other.

Key in the agreement is that the two dams, all the attendant facilities, and key investments made over the last 20 years return safely to the government represented by UEGCL. Details from the concession indicate that the Concession and Assignment Agreement has other agreements to it, including the support agreement which was signed with the Ministry of Finance giving assurances to Eskom Uganda that the investment would be safe and recoverable. “In there, the key one is that investments whose cost have not been recovered at the time of transfer, would be monetized and Eskom will have the right to have that money given back to them by the government,” an official at UEGCL reveals.

According to reports, the government of Uganda has budgeted Shs45.7 billion as the first instalment which should be paid by March 31, 2023. Eskom has other agreements like the power purchase agreement with Uganda Electricity Transmission Company and a generation license issued by the Uganda Electricity Regulatory Authority.

The agreement provides that the buyout money must be paid within 30 days of the end of the concession.

President Museveni on Tuesday assured his South African counterpart that Eskom’s exit on 31 March 2023 would be managed amicably to allow smooth repatriation of Eskom’s assets.

While holding bilateral talks in Pretoria on Tuesday,  the two leaders lauded the good trade relations between Uganda and South Africa, However, President Ramaphosa highlighted that while economic relations between the two countries have grown over the years, South Africa is concerned over the decline in the number of South African businesses operating in Uganda. The Heads of State gave a firm commitment to resolve any challenges experienced by the private sector in both countries. The Heads of State requested the Ministers responsible for Trade and Foreign Affairs of the respective countries, to urgently put in place a mechanism, to address these challenges and ensure protection of investments.