Umeme records Shs139bn net profit

Performance is attributed to increase in electricity demand, cost reduction

Kampala, Uganda | JULIUS BUSINGE | Shareholders of power distributor, Umeme Limited will not go home with nothing in their Annual General Meeting slated later in the year as the company recorded a slight increase in net profit from Shs132bn in 2018 to Shs139bn last year.

“We continue to deliver strong results,” the company executives said in a statement released on March 23.

Overall, revenue increased by 19% to Shs1.7trillion in 2019 compared to Shs1.4trillion in 2018 with underlying growth in electricity sales of 6%.

The company paid Shs1.2 trillion to Uganda Electricity Transmission Company Limited as transmission fees.

In terms of sales distribution, industrial large customers took the largest share (37%), domestic (28%), industrial medium (20%), commercial (15%) and street lighting (insignificant).

Patrick Bitature, the board chairman and Selestino Babungi, the company’s managing director said in an accompanying statement that through their continuous drive for efficiency, increased use of technology and growth in the customer base, the operating cost per customer reduced by 14% to Shs146, 505, down from Shs169, 464 in 2018.

The overall distribution, operation and maintenance costs in 2019 reduced by 2% compared to 2018.

However, the company recorded an increase in cost of sales from Shs912million to Shs1.1bn. Finance costs on the other hand reduced from Shs65million to Shs58million. Shareholders have a reason to be somewhat happy after earnings per share was reported at Shs86 in the period ended December 2019 compared to Shs82 a year earlier.

Overall, total assets grew from Shs2.3trillion in the period ended December 2018 to Shs2.5trillion (an increase of 8.4%) in the period ended December 2019. Meanwhile, its liabilities increased from Shs737billion to Shs755bn in the period under review.

Customer numbers increased from 1.2million to approx.1.4million during the same period under review. Energy losses reduced from 16.6% to 16.4%. Revenue collection dropped from 102.5% to 99.7%. Investments in the distribution network grew from $627million to $656million.

More investments in 2020

Meanwhile, the Electricity Regulatory Authority (ERA) has approved investment projects of Shs310bn for 2020. This is intended to improve supply reliability, quality of electricity supplied to consumers and reduce technical losses.

Some of the projects in the pipeline include; Ntinda Substation reconfiguration, Gulu Substation reconfiguration, conversion of remaining postpaid customers to repayment metering, Siti 2 HPP integration lines, Mbale Industrial Park substation development and Karuma evacuation lines construction.

In terms of safety, the number of fatal accidents resulting from both accidental contact and illegal interference with the electricity distribution network were 18 in the entire year. The root causes include hooking on the network, power theft, vandalism of the distribution network infrastructure and poor in house wiring.

ERA and sector experts have in the past urged the public to distance themselves from these acts to avoid unplanned death in line with Umeme’s call.

“Whilst this is a lower number of fatalities than in the previous year, attributable, at least in part, to our ongoing sensitisation of the public, we urge the public to remain vigilant and proactively report any safety-related incidents,” the company executives said.

2019 dividend

Subject to the approval of the shareholders, the directors recommended to members that a final dividend of Shs41.3 per ordinary share be paid for the year ended December 2019 up from Shs40.9 that was paid out for the year 2018.

The payment is subject to withholding tax deductions, where applicable to shareholders registered in the books of the company at close of business on June 2, 2020. If approved, officials said that the outstanding dividend will be paid on or about July 17, 2020.

Concession, COVID-19 steps

This development comes as company executives are in the progress to commence soon negotiations with the government for renewal of the concession agreement. The company’s operating experience is expected to expire in 2025.

On COVID-19, officials said that directors and managers have taken action aimed at mitigating the impacts of the COVID-19 pandemic.

“The impacts of the virus are uncertain but the company will continue to monitor and take action as necessary,” officials said, “contingency plans are in place and will be modified as appropriate to maintain service to customers and safeguard our staff and assets.”

Going forward, the executives said they are continuing to align company operations to the four key priorities of the country – increasing grid connections, increasing demand, reliability of supply and driving efficiencies.

Uganda’s installed generation capacity has increased by 15% to 1, 134MW following the commissioning of the 183MW Isimba hydropower dam in March last year.

Generation capacity is expected to increase in case the government commissions the 600MW, Karuma Hydropower dam at the end of this year.

However, the electricity demand remains lower than supply at 645MW at peak but is expected to increase as more consumers – especially in the industrial category – come onboard.

(This week’s THE INDEPENDENT #CoronaVirus Special Edition is online-only and available to all our readers. Read the other articles in the magazine here –click) 

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