Despite a tough 2021, marked by a sluggish economy and sticky pandemic-related logistics obstructions on one hand as well as delayed government funding for the free Electricity Connections Policy (ECP), the power distributor has reported that in the first 6 months of 2021, it forged ahead with is its investment agenda, devoting UGX49 billion in improving reliability and connecting new customers.
Umeme which accounts for 97% of Uganda’s distribution market share, said that following a government decision in late 2020 to allow self-funding customers to pay for new connections and the resumption of the ECP in March 2021, it had ramped up new connections.
“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 accompanying the release of the HY 2021 results.
“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.
Of the new customers, 98 and 751 were industrial and commercial customers respectively.
In a separate investor briefing, Mr Babungi said that Umeme expected to receive a further 60,000 ECP kits from the government as well as connect an additional 20,000 self-funding customers, to ease the backlog, amassed as a result of the ECP delays.
“We are accelerating customer connections, at an average of 1200-1500 connections daily with a target to ramp this up to 2,000 daily. We are also upping our inspections of medium-to-large consumers to make sure we fix all their issues. We are turbocharging new connections, with an aim to close the year at 100,000 new connections,” he told the investors during an online briefing on 23rd August 2021.
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.
Pre-paid sales contribute 31% of the total revenues.
Umeme invests UGX49.6 billion to increase reliability
Umeme said that its regulator-approved USD 30 million (UGX 110 billion) to power supply reliability, demand growth, public safety, energy losses reduction and efficiency in operations was on course and that in the first 6 months of 2021, it had invested USD14 million (UGX49.6 billion). Some of the projects under implementation include Nakasamba Power station in Entebbe, 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 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.
Unlocking electricity demand and increasing shareholder value
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“The growth during the period was driven by increased industrial demand at 13% from new and existing customers, commercial demand at 13% and domestic customers at 5%,” Umeme said in a statement.
Mr. Babungi 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.
However, due to Covid-19 related restrictions on movement, the company’s field enforcement activities to curtail power theft were inhibited, thus a slight increment in energy losses to 17.9% in HY 2021 from 17.5% in the same period in 2020.
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.
Increased energy sales led revenues to grow 9.3% to UGX 928 billion from UGX 849 billion for the same six months in 2020. As a result, 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) strengthened by 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.
Looking forward, the power distributor said it was focusing on minimising the pandemic effects on the business as well as preserving staff safety, service excellence, and business continuity.
Umeme also said that the lack of clarity of the concession post-2025, was constraining “significantly our ability to raise capital and make capital investments in the electricity distribution system to achieve 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.
