Umeme Shakes Off Challenging Year
Africa Industry

Umeme Shakes Off Challenging Year

Leading power distributor Umeme navigated a challenging year to register profit for its shareholders amidst a tough COVID19 operating environment and the regulatory lag in recovery of outstanding income.

Although the profits declined, the giant utility managed to complete its capital investment programme of $75m (about sh279b) to improve the network distribution capacity, supply reliability and operational efficiencies.

The investment went into the building and upgrading 7 substations in Ntinda, Kakiri, Gulu, Mbale, Bombo and Nakawa, constructing distribution integration lines with transmission infrastructure, expansion of distribution transformer zones and conversion of 168,000 customers to prepayment metering.

Mr. Selestino Babungi, the Managing Director, said the performance reflected the challenging operating and regulatory environment.

“The lockdown and Covid restrictions impacted our revenues from the ECP, which decreased by 7% to sh1,661 billion in 2020 compared to sh1,777 billion in 2019.

Revenues from the provision of ECP services reduced by 72% to sh54 billion from sh190 billion of 2019, due to suspension of the ECP Programme,” Babungi said.

He explained that the total electricity sales volume, however, remained in line with the 2019 levels, with decline in the commercial and medium industrial tariff categories.

Mr. Babungi was optimistic that the utility would bounce back strong in 2021 given great projections in the economic recovery and improvements in the general operating environment.

“We shall continue to focus on safety, continuity of electricity supply services, resolution of the regulatory matters, operational and financial performance,” he pledged.

Mr. Babungi observed that the resolution of the Concession extension beyond 2025 is fundamental in unlocking long term capital for investment in the distribution network to evacuate new loads, increase access, improve the quality of supply and reduction of technical losses.

He noted that a reduction in electricity demand and increase in power losses due to lack of field activity and suspension of the free- connections programme due to lack of funding during the period.

Umeme connected 59,623 customers to the grid, which was below the planned target of the Electricity Connections Policy (ECP).

“We are working closely with Government and funding agencies to source alternate funding and allow us to recommence the entire programme and address the backlog,” Mr. Babungi said,

“To further improve the connections process, we have automated the new connections process where customers can submit their applications through digital channels without physically visiting our service centres.”

The utility also converted 168,000 postpaid customers to pre-payment metering, which now covers 97% of the domestic customer base, contributing 30% of the revenues.

This shall further enhance cost efficiencies, working capital and overall better customer experience.

Energy losses increased to 17.5% from 16.4% of 2019, on account of limited field activities due to the pandemic restrictions on movement and suspension of the ECP which led to increased illegal connections.

“With the easing of restrictions, we have recommenced the implementation of our loss reduction plans under Operation Komboa.

This is aimed at redeeming our network from illegal users and operators so that customers get safe and quality electricity,” Mr. Babungi said.

He said the operation, which follows a series of awareness drives in the communities also identifies illegal connections, disconnect them, arrest, and investigate suspects and present them in the courts of law for prosecution.