Umeme Defends Its Power Distribution Contract

In its defence filed in court on Friday, Umeme said the power distribution concession deal it signed in 2004 with the central government was legal.

Umeme is battling Rashid Kigemuzi who lodged a suit in the High court in August contesting the legality of its 20-year concession to distribute power in Uganda. Umeme contends that the concession signing followed established and transparent government policy and procedure.

“The second respondent [Umeme] shall adduce evidence that the incorporation by Globleq Holdings Limited and Eskom Enterprises Limited by the second respondent as a special vehicle for performance of the concession was in accordance with accepted principles, policies, practices and regulations of government and international best practices for transactions of that nature,” Umeme says.

In his suit, Kigemuzi claims that on November 26, 2006, government and Umeme illegally and fraudulently increased the power loss cap from 33 per cent to 38 per cent, for purposes of compensation. Umeme roundly denies the claim.

“The second respondent has not falsified or refused to reduce power losses or otherwise unjustly enriched itself and is not responsible for the approval, establishment and fixing of the tariffs which is a preserve of the Electricity Regulatory Authority,” Umeme says.

Through Shonubi, Musoke and Company Aocates, Umeme denies the accusation that since 2004, it has falsified its levels of investment in the distribution sector.

“The second respondent shall adduce evidence to show that it’s regulated by force of statute and has sufficiently disclosed its level of investment to the Electricity Regulatory Authority,” Umeme claims.

According to Kigemuzi, Umeme claims to have invested Shs 32bn, yet its real investment has not exceeded Shs 16bn. Umeme also denies the allegation that the concession in question inhibits government’s right to terminate the agreement.

Contrary to Kigemuzi’s assertion, Umeme says that in signing the concession, government never surrendered Uganda’s economic sovereignty since it’s in line with the economic reforms instituted to diversify the electricity sector. According to Umeme, Kigemuzi will be put to task, during the hearing of the case, to prove that the concession was illegal.

Kigemuzi, who accuses government of deliberately ignoring a parliamentary resolution to have the concession terminated, wants court to nullify it.

The case has been allocated to Justice Elizabeth Musoke.

Source : The Observer

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