By KT Reporter
Trading in Umeme Ltd shares at the Uganda Securities Exchange has been “voluntarily” suspended for at least two weeks over the ongoing transition activities.
Today marks the end of the 20-year electricity and distribution concession held by Umeme, and the company hands over the assets back to Uganda Electricity Distribution Company Ltd, which commences operations on the network tomorrow, April 1.
UMEME Limited is listed on the Main Investment Market Segment of the USE, where it has been one of the best-performing counters. It is also cross-listed on the Nairobi Stock Exchange.
Its exit from the electricity market has caused uncertainties not only within the electricity user community but also the shareholders, who are not sure about the fate of their investment.
Umeme Ltd’s major shareholders include the National Social Security Fund (NSSF), which is the largest with a 23.34 percent stake, Allan Gray (Pty) Ltd with 14.82 percent, and The Rock Creek Group LP with 8.902 percent.
ICM Investment Management Ltd holds 8.313 percent, while the rest is held by smaller institutional and retail investors.
Ugandan investors hold 39.2 percent and foreign investors 60.8 percent of the 1,624,278,005 shares.
Umeme Ltd shareholder register shows that 1,475 large investors hold 99.33 percent of the shares, while 5,068 smaller ones collectively own a stake of 0.68 percent.
“The involuntary suspension of the counter by the USE is made in the interest of investor protection and maintaining transparency of the market,” says USE, adding, “The suspension is based on the ongoing public speculations regarding the end of the UMEME concession and determination of the final buyout amount.”
A controversy has been simmering over the last five years since the government indicated its intention not to renew the concession, and the thousands of shareholders started questioning what happens when the only business of the company is lost.
Assurances that they would benefit from the government buyout (compensation for the Investments made by the company but not yet recouped at the time of the end of the concession) were not enough to calm the fears.
The worries were made worse following the ongoing disagreements between Umeme and the government, with the former claiming 234 Million Dollars (about 856 Billion Shillings) while the latter, based on the Auditor General’s assessment, decided on 118.3 million (433.4 Billion Shillings).
The AG’s report also noted that there was another 9.78 Million Dollars (35.8 Billion Shillings) still undergoing verification.
Umeme Board Chairman, Patrick Bitature, reiterates that they have already received the 118.4 Million Dollars that was reached after a detailed audit by the Office of the Auditor General, who ensured financial decisions are based on verified figures.”
However, reports indicate that the company may consider appealing this decision or seeking international arbitration.
These controversies have heightened the uncertainties amongst the shareholders, who have reportedly gone on a panic sale of their shares on the stock market to avoid any possible losses.
The suspension shall take effect today, Monday, March 31, for two weeks “to enable the company to address key concerns regarding price-sensitive information and to mitigate the potential impact of the end of the concession period,” says a statement by USE.
It adds that during the suspension period, the Company shall continue to comply with all the continuous listing obligations applicable to it.
In addition, the company shall submit a progress report to the Exchange regarding the current state of the affairs of the company and any proposed action-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
