The Umeme Staff Pension Scheme was supposed to be like any other pension fund—steady, predictable, and focused on making sure members get their money on time.
But instead of just paying out everything after Umeme’s concession ended, the trustees decided to take a gamble.
When Umeme’s 20-year electricity concession ended in March 2025, the pension scheme sold most of its assets.
From those sales, it was able to pay out about 92% of members’ savings.
But the trustees held on to Umeme shares instead of selling them.
Why? They believed that Umeme’s ongoing legal case against government, where the company is demanding $292 million for its undepreciated investments, might lead to a big payout.
If Umeme won, those shares could be worth more, and the scheme could use that money to pay off the remaining benefits in full.
Now, however, reality has set in. Arbitration cases take long to be settled.
The regulator also wants pension funds to show the true market value of their assets (not just what they hope they’re worth).
But beyond this, Uganda’s stock market is not very liquid—meaning it’s hard to sell a large block of shares without driving the price down.
Because of these problems, the scheme is now trying to sell the Umeme shares after all.
The trouble is that they need money quickly, which makes it harder to negotiate a good price.
That urgency means they may have to sell at a discount, leaving less money available for members.
Asset-liability matching mismatch
Pension funds are meant to carefully match their money (assets) with what they owe members (liabilities).
This is called asset-liability matching (ALM). It means the fund should hold investments that can easily be turned into cash when members need to be paid.
But the Umeme trustees did the opposite. They held on to one big, risky asset—their Umeme shares—hoping that if the arbitration case went well.
That gamble created three big problems.
First, timing risk. Arbitration cases don’t move on pension timelines; they follow court schedules that can drag on for years.
This means members may wait much longer than expected to get their money, and in the meantime, their financial struggles get worse.
Second, concentration and liquidity risk. The scheme is sitting on a large block of Umeme shares.
Uganda’s stock market is small, so selling that many shares at once is difficult.
If they try, they’ll probably have to accept a lower price, especially since the pending arbitration makes buyers cautious.
Third, valuation risk. The regulator (URBRA) has told pension funds to stop using a smoothing method (amortized accounting) and instead show the real market value of their investments (fair value).
This means the scheme can no longer “hide” short-term ups and downs in asset prices.
Any drop in value must now be shown openly, making the funding gap clearer and harder to ignore.
The moving parts
In May 2025, Umeme went to arbitration over how much government should pay at the end of its concession.
The dispute was about undepreciated investments—basically, money Umeme said it had put into the electricity network that hadn’t been fully used up.
By March 2025, the 20-year concession ended. At that point, Umeme’s responsibility to keep paying into the staff pension scheme also stopped.
The trustees of the pension fund now had to make sure members got their savings.
On April 1, 2025, UEDCL took over running the electricity distribution network.
This meant no more new contributions were coming into the pension scheme.
From that day, the scheme became a closed fund, with only one job left—wind down, sell assets, and pay members.
Then in July 2025, Umeme declared a special dividend of UGX222 per share. For the pension scheme, which owned 7.35 million shares, this worked out to about UGX1.63 billion.
That was useful money, but not nearly enough to cover all the unpaid benefits.
Remember, the scheme had reported UGX43.1 billion in assets in 2023, and around 8% of members’ savings was still waiting to be paid.
Here’s the tension: the trustees had told members they were holding out for the dividend and the outcome of the arbitration case to complete payouts.
The dividend has already been declared and (if they were on the list of shareholders at the time), paid.
Yet some members are still waiting, and the arbitration process could drag on for years.
Who carries the pain?
There are about 70–80 former Umeme staff who were not taken on by UEDCL after the concession ended. Right now, many of them don’t have jobs.
For these people, the unpaid 8% of their pension savings is not just a small balance—it’s the money they desperately need.
And a delay, even if for a few months can throw their lives into crisis.
That’s why pension law is clear: the first duty of trustees is to protect members and pay them on time.
In simple terms, meeting urgent needs today is more important than waiting for a possible windfall years down the road.
Energy Ministry Orders UEDCL Board to Investigate Top Management Over Performance GapsBalance-sheet reality check
Before the concession ended, the pension scheme looked strong on paper.
Its assets grew from UGX33.9 billion in 2022 to UGX43.1 billion in 2023.
But that was during the years when workers and the company were still contributing money regularly.
Back then, the scheme could afford to think long-term.
After March 2025, the story changed. No new money was coming in.
The scheme became a closed book, meaning its only job was to pay out benefits.
At that stage, what mattered most was cash in hand (liquidity), not investments that might grow in value years down the road.
The scheme’s investments were also very concentrated.
It held 7.35 million Umeme shares, 15.02 million shares in Stanbic Uganda, and 3.7 million shares in Safaricom.
That’s a heavy tilt toward company shares, which are risky and not always easy to sell quickly.
On top of that, the Safaricom stake is tied to the Kenyan shilling, so any currency swings add even more uncertainty.
Then comes the issue of government bonds.
URBRA now requires pension funds to value bonds at their real market price instead of smoothed out changes over time.
With interest rates rising, the market price of bonds can look lower even if the bonds will pay in full at maturity.
This makes the scheme’s balance sheet look weaker and removes the excuse of simply “waiting it out” while members are left unpaid.
Why selling now is hard—and why waiting could be worse
When there’s an ongoing arbitration case, investors get nervous.
Anyone who thinks about buying Umeme shares today knows there’s uncertainty, so they will only agree to buy at a discounted price.
That’s the penalty of having shares tied up in a legal dispute.
Selling such a big block of shares is also hard. Uganda’s stock market is small, so trying to unload millions of shares at once could overwhelm demand.
If the trustees try to sell openly on the exchange, the price could collapse—what traders call “cratering.”
Meanwhile, every month that passes without selling hurts members.
They are the ones waiting for their pensions. Instead of receiving cash today, their money is effectively locked in a bet, something the trustees cannot control.
Thomas Tondo, chairman of the Umeme Staff Retirement Benefits Scheme, says that although they liquidated all the scheme assets after expiry of the concession agreement, they held on to the Umeme shares.
Why? Because “we thought we could unlock a lot of value for our members after the conclusion of foreign arbitration proceedings”.
“We decided to put those shares on sale recently because of the complex situation surrounding the foreign arbitration process at the moment.
“We want to pay all the members’ claims in full at once but getting a buyer for those shares is not easy,” he say.
Governance signals
The pension scheme was legally separate from Umeme, and the company’s senior managers were not members.
That helped reduce conflicts of interest.
But it also meant that after the concession ended, there was no new money coming in from the employer to cover mistakes.
From then on, the trustees had to lean toward low-risk, highly liquid choices.
Umeme’s Chief Financial Officer, Andrew Oyie, confirmed that all employer contributions had been fully paid before the concession expired.
That was important for compliance, but it didn’t solve the bigger issue.
Once the concession ended, there was no extra cash cushion.
The responsibility for managing payouts—when to sell, how to price, and how to report—rested entirely with the trustees.
The regulator, URBRA, has been clear that liquidation should be handled with a proper plan and fair-value reporting.
This isn’t just formality. It’s a push to make trustees convert assets into cash faster and show the real market value of what they hold.
The aim is to prevent members from being left in uncertainty and limbo.
A source at URBRA, who requested anonymity to speak freely says, the regulator had a meeting with the trustees of the Umeme Staff Pension Scheme and advised them to clear all the benefits due to members that wanted to exit the scheme.
“But they are yet to get back to us, though the scheme liquidation process carries various reporting requirements.
“However, selling off Umeme shares for purposes of settling all members’ claims, particularly for the vulnerable former employees, might not be very effective.
“The scheme could choose to sell those shares now but might incur a capital loss if they are sold at a lower price compared to their purchase price,” the source says.
He further notes that this means the scheme might not generate enough money to clear all members’ claims in full.
