UMEME CEO Celestino Babungi

Electricity distributor Umeme says it won’t eliminate technical losses too soon as the process requires huge investment in the infrastructure spread over the years.

The company’s 2017 financial report released Thursday in Kampala shows distribution losses reduced to 17.2 percent during the year compared to 19.0 percent achieved in 2016, whereas the energy losses recorded in the first half of 2017 were 17.5 percent whereas losses in the second half averaged 16.9 percent.

However, Umeme officials said an independent survey showed that technical losses have come down to 7 percent, and alluded the slouch to old wires and meters, among infrastructure.

However, Umeme officials hope to reduce the figure further as they power more investments for the remaining period of the 20-year concession signed in 2005 between the company and government of Uganda.

The improved efficiency is attributed to heightened efforts to reduce commercial losses throughout their network through continuous metering installation audits, use of technology like smart metering for large consumers and community mobilization.

Releasing the financial report, UMEME officials said the regulator, the Electricity Regulatory Authority (ERA), asked the company to invest more in electricity access in the country where about 1.1 million customers have been connected.

Following President Yoweri Museveni recent letter to Energy minister Irene Muloni, querying the 17.5 percent technical losses in books, UMEME says it has invested heavily in infrastructure to bring down the losses even as more still remains to be done. This includes investment in about 7000 transformers, according to company CEO Celestino Babungi.

Pre-paid metering

According to the company financial report, customers on pre-paid metering has increased to 75.3 percent of the total customer base compared to 65.0 percent as of December 31, 2016. That was matched by an increase of Pre-paid revenue of 21.1 percent of total revenue from 16.3 percent as of December 31, 2016.

Government

Babungi says prepaid revenue growth has been supported by installation of customized pre-payment metering units at select Government of Uganda offices. This has led to minimizing domestic electricity arrears with some government offices paying upfront.

Meanwhile the report says UMEME’s revenue collection for the year remained strong, with an outturn of 100.2 percent compared to 98.4 percent during 2016. Balungi says the key drivers for the rise in revenue are improvements in the revenue cycle, increasing penetration of pre-payment metering and debt collection initiatives. The Company has focused on improving customer service and providing multiple payment channels to customers including leveraging existing banking and mobile money infrastructure, the report says.

Revenue increased by 8.7 percent during the year to Ushs 1.5 trn supported by a 7.5 percent rise in units sold to 2,760 GWh. Revenues from industrial customers increased by 13.2 percent. Gross Profit increased by 8.3 percent to Ushs 515.9b on account of improved distribution margins and continued reduction in energy losses. However, delayed approval of some capital investments by the regulatory authority (ERA) continues to negatively impact the gross margin.

The Umeme CEO Babungi says that the company is readying itself as the construction of major power dams like Karuma, Isimba and others near completions, accompanied by the development of industrial parks that will need more power. The company is also optimistic government will renew its contract, as it is considered the best electricity distributor in the region, running without government subsidies.