Electricity distributor profits go up nearly fourfold to $35m
March 25—There is good news for Umeme.
Announcing its financial results today, the electricity distributor posted a profit of UGX 132,815,000,000 ($35.8 million) in 2018, up from the previous UGX 35,494,000,000 ($9.5 million) while earnings per share also went up nearly fourfold from UGX 22 to UGX 82.
The company said, ‘The results achieved for the year 2018 affirm our capability and demonstrate the overall improvement in the electricity distribution system in Uganda.’
However Umeme is still waiting for government approval for an extension of its concession beyond 2025, before making any plans to raise new capital for investment. An application was made through the Electricity Regulatory Authority (ERA) last year. On the other hand, Umeme has also in recent times endured negative sentiments from Parliament and President Yoweri Museveni over its performance in taming energy losses, but the company has been able to substantially limit power thefts by installing pre-paid metres.
The listed company, which won the 20-year concession in 2004 said, ‘If approved, such extension will enable Umeme to mobilize and deploy long term capital that is necessary to expand the distribution grid and increase uptake of the new generation capacity’. The National Social Security Fund owns nearly a quarter of the company which has assets of nearly $650 million.
However Umeme acknowledges the need to accelerate the connections rate under the government’s Electricity Connections Policy to achieve the National Development Plans. Last week, Museveni officially turned on the close to $600 million Isimba Dam which will add 183MW to the national grid at full capacity.
With just over a million customers to date and electricity sales of 3GWh during the 12 months ending last December, Umeme generated UGX 395,213,000,000 ($106 million) in cash.
The energy losses for 2018 were 16.6 pc compared to 17.2 pc for 2017; and were 27.3 pc in 2011. Over this regulatory cycle, energy losses have reduced by 10.7 pc while the operating cost per customer, over the last seven years, dropped by 30 pc (in nominal terms).
Some UGX 230 billion of this went into capital investment. The company said, ‘A number of projects completed were related to load growth and grid expansion. Umeme is well positioned to implement its long term investment programme in tandem with Government electrification targets’.
The Umeme concession involves; operation, maintenance and upgrade of electricity distribution infrastructure, electricity retail and provision of related services. ERA regulates the sector including setting operating standards and appropriate end user tariffs.
Operating costs increased by 13 pc to UGX 226 billion in 2018, compared to UGX 199 billion in 2017 This was mainly due to increased business activities and general inflation adjustments. A pro-longed rainy season last year, also meant Umeme increased the spend on network repairs and maintenance to ensure public safety and supply reliability.
More to follow