Notice of Termination of Licences and Reasons for decision
The Electricity Regulatory Authority (‘the Authority’) issued three Licenses to Ferdsult Engineering Services Limited (‘the Licensee’) as follows:-
- Licence No.066 effective 1st December 2007 to distribute and sell electricity in Kakumiro, Kibaale and Kagadi concession area for a period of 10 years.
- Licence No. 086 effective 25th April 2008 to distribute and sell electricity in the Rukungiri-Kanungu concession area for a period of 10 years.
- Licence No. 087 effective 1st January 2011 to distribute and sell electricity in the Masaka-Bukakata, Kyotera-Mutukula-Kasensero, Mbarara-Kikagati-Ntungamo concession area for a period of 10 years.
On 2nd December 2016, the Licensee submitted a notice to relinquish the above licences and cease operations effective 28th February 2017, pursuant to terms and conditions in the Licences.
The Authority at its 270th meeting held on 20th December 2016, considered the notice to relinquish the Licences held by the Licensee and resolved to terminate the Licences and to appoint Uganda Electricity Distribution Company Limited toundertake the operation and management of the network, assets and customers of the Licensee in the relinquished service territories.
Reasons for decision
- On 2nd December the Authority received a Notice to relinquish Licences held by the Licensee which amounts to termination of Licence under the Licence terms and conditions.
- According to the Licensee, it was no longer sustainable to operate the concessions.
- The Authority sanctioned a review of the Licensee’s performance and found that the Licensee’s operations were not prudently managed.
- There was doubt over the Licensee’s going concern status, with the Licensee’s liabilities doubling its assets and edging to over 3 times by the close of 2016.
- The Licensee was no longer interested in operating the service territories.
For the above reasons, the Authority decided that in order to protect the interests of consumers and ensure continuity of supply, it was appropriate to give a Notice of termination of the Licences and to appoint Uganda Electricity Distribution Company Limited, which was set up as a successor company of the Uganda Electricity Board to undertake the distribution of electricity in Uganda, totake on the network, assets and customers of the Licensee.
THEREFORE the Authority hereby gives Notice that, unless the Authority otherwise directs, with effect from 28th February 2017, the Licences held by the Licensee (Licence Numbers 066, 086 and 087) shall be terminated.
The Authority gives further Notice that effective 28th February 2017, Uganda Electricity Distribution Company Limited shall take on the network, assets and customers of the Licensee in the service territories relinquished.
The Licensee is directed to cooperate and accord Uganda Electricity Distribution Company Limited any assistance required for the smooth transition.
AG. CHIEF EXECUTIVE OFFICER
ELECTRICITY REGULATORY AUTHORITY