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Umeme’s $14M investment and govt resumption of free connections boost power distributor’s HY 2021 sales by 11.8%

NELSON MANDELA | PML Daily ReporterbyNELSON MANDELA | PML Daily Reporter
August 24, 2021
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Umeme Managing Director, Selestino Babungi, speaks at the March 2021 launch of MyUmeme Online- an electronic portal that allows self-funding customers to apply for power online and get connected, usually in 3 days. The power distributor, while releasing their HY2021 results said it was committing USD30 million (out of which USD14 million has already been invested), to increased system reliability and efficiencies, as well as ramping up new connections (PHOTO/Courtesy).

KAMPALA – 2021 may have been a tough year for many a business, but this did not stop Umeme from going ahead with this 2021 USD 30 million agenda, sinking USD14 million in the first 6 months of 2021. This and the government’s resumption of the free electricity connections policy, combined to stimulate demand amongst existing and new consumers, helping Umeme remain resilient.

Umeme reported that in the first half of 2021, industrial demand grew 13% from new and existing customers, while commercial demand too grew at 13% and domestic customers at 5%. Overall, power demand grew by 11.8%, to 1,720 GWh up from 1,538 GWh for the same period in 2020.

“On receipt of connection materials in June 2021 from the Government under the free connections program to connect 87,500 customers out of the backlog of 210,000, we resumed the implementation of the program and have connected 8,907 of the free connections to date,” Umeme said in a media statement.

“In addition, we have added 31,722 customer-funded connections, bringing the total for the period to 40,629. We aim to clear the 87,500 connections by November 2021 as the Government mobilises additional financing for the rest of the backlog,” Umeme’s statement added.

Increased electricity sales caused revenues to grow 9.3% to UGX 928 billion from UGX 849 billion. Gross profit increased 28.7% to UGX 299 billion compared to UGX 232 billion in the same period in 2020.

Earnings Before Interest Tax Depreciation and Amortization (EBITDA) grew 48% to UGX 173.8 billion compared to UGX 121 billion of 2020.

As a result, net profit more than doubled to UGX 48.2 billion compared to UGX 21.8 billion in the interim period to June 2020.

Umeme’s customer base now stands at 1,530,733 of which 29,733 are under the post-paid system. The power distributor said that in the first 6 months of 2021, it had converted 8,864 of the post-paid customers to its Yaka pre-paid system, with the balance of 20,869 to be converted by the end of the year.

The site at Nakasamba, Entebbe where Umeme is constructing a 20MVA Substation. The USD1.5 million substation on completion, the substation will further stabilize power in the Entebbe area where vital installations such as the National Water and Sewerage Corporations Plant, Entebbe International Airport and the Statehouse are located. It will also cater to new demand in the area. The substation is part of Umeme’s USD30 million investments this 2021 (PHOTO/Courtesy).

Investing into a more reliable and efficient network

Further explaining the company’s Capex agenda, Umeme said that some of its key investment projects this year, included the Nakasamba Power Station in Entebbe, the conversion of 30,000 post-paid customers to Yaka, line refurbishments in Kamuli, Kibimba, Bubulo, Fort-Portal, Kisubi Kampala South; reconfiguration and supply stabilisation in Naalya, Najjera, Buwate, Namugongo and Ntinda belt, additional transformer zones and new connections.

Umeme also said they it had rolled a new online applications platform that has simplified and improved the customer connections experience by enabling new applicants under the self-funded program to contactless apply for a connection and get connected within an average of 3 days.

Addressing an online investor briefing, on 23rd August 2021, Selestino Babungi, the company’s Managing Director said that growing energy demand was important in allowing the electricity subsector to benefit from economies of scale as increased volumes would reduce on costs overlay and benefits would accrue to consumers in form of reduced tariffs.

Umeme also said that due to increased investments in automation as well as enrolments to prepaid metering, in the first six months to 30 June 2021, its revenue collection rate was 99.1% compared to 93.3% for the same period in 2020.

“Collection of billed electricity revenues is fundamental for the sustainability of the electricity supply industry, growth, and overall service delivery to our customers. The cashflows enable the generation, transmission and distribution companies to meet their operating and investment obligations, without constraining the Government’s fiscal resources. We extend our appreciation to our customers that have continued to pay their bills on time,” Umeme said in a statement.

Looking forward, the power distributor said it was focusing on minimising the pandemic effects while upholding staff safety, service excellence, and business continuity.

Umeme also said that the lack of clarity of the concession post-2025, was significantly hampering its ability to raise capital to make the necessary investments in line with the national electrification goals” but awaited further engagements with Government for an “amicable” way forward.

“We remain committed to driving Uganda’s electrification agenda through efficient and safe operation of the electricity distribution system,” the power distributor reiterated.

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