Uganda’s power distributor reports dip in profits
April 27–Umeme, Uganda’s electricity distributor, reported a slight dip in profit after tax from UGX106 billion ($34 million) in 2015 to UGX 100 billion mostly due to high interest rates and the General Elections period that slowed down economic activity during first half of 2016.
This contributed to the slowest growth of electricity sales in recent years in spite of signing up 157,270 new customers. However, revenue grew by 13% to UGX1.3 trillion compared to the same period in 2015 on the back of additional network investments totaling UGX318 billion and a 4.4% rise in power sales. To date, since winning the distribution concession in 2005, Umeme has spent $500 million on network improvements.
Uganda’s National Social Security Fund is the largest single Umeme shareholder at 23% while just over 40% of the shares are held by individual small investors and the rest by a mix of asset management firms and the International Finance Corporation.
Umeme customers now number 950,814, a rise of 19.8% on 2015 while energy losses averaged 19% compared to the 19.5% recorded the previous year. Company officials are relatively pleased with the performance over 12 months in the areas of reliable supply, less network outages and grid connections.
Patrick Bitature, the Umeme Chairman said, “The Board and Management are focused on acceleration of regulatory approvals for investments and reducing energy loses during the year. The company is motivated by the growth opportunities presented by the country’s industrialization drive and related progress in increasing power generation capacity. The company continues to engage with Government to align our network investments plans with Government electricity sector targets while supporting increased access to electricity to businesses and households.”
Converting more customers to the Yaka pre-paid system has helped Umeme consistently improve its revenue collection rate during the past three years. In 2016, this was 98.4% compared to 98.2 in 2015. Though the difference seems small, it should be seen in light of the fact that with 65% of their customers now on Yaka, Umeme is not losing as much revenue as before or spending as much money chasing after people who don’t pay up. This is also being backed up by a high profile campaign against power theft.
Although net profit declined 5.8%, the cross-listed company, (in Kampala and Nairobi), is optimistic about 2017. In highlights to its 2016 results it is stated. ‘Public investments in infrastructure projects in the power and transport sectors will be key drivers on growth in 2017-18. Government expects the oil sector to drive growth in the medium term with production targets of 200,000 barrels per day by 2020’.
Notable projects carried out in 2016 included converting several government accounts to Yaka, which not surprisingly, has not gone down well in some quarters, but will make a huge saving for the Treasury. Other projects were the Moniko sub-station, upgrading Namanve Industrial Park, new connections and network expansion.