The year 2018 was good business for national electricity distributor, UMEME as its gross profit grew 11 percent to Shs581 billion from Shs525 billion realised in 2017, according to financials in annual report 2018 which was released during the shareholders annual general meeting held in Kampala on Thursday.
According to the financial statement, the 11 per cent rise gross profit in 2018 was on account of revenue growth and improved margins underpinned by capital investments allowed for recovery in the tariff and improved operational efficiencies.
The profit increased as the company’s net revenue jumped to about Shs1, 493 billion in 2018 from Shs1, 485 billion. The rise in revenue came as electricity sales increased by 13 per cent to Shs1.6 trillion in 2018 from Shs1.4 trillion in 2017.
The revenue increased as units of electricity sold in Gigawatt hours (GWh) rose by 9.1 per cent to 3,011 GWh in 2018 from 2,760 GWh in 2017, boosted by improved supply, increased industrial demand and reduction in energy losses which stand at 16.6 per cent from 17. 2 per cent in 2017.
Umeme board Chairman Patrick Bitature while addressing shareholders in Kampala said the customers connected to the grid have increased fourfold to 1.3 million at the end of 2018 from 290,000 as of 2005 when the company signed 20-year concession with government to distribute electricity in the country. Prepaid metering has been rolled to 950, 000 of the customers, contributing 24 percent to the company’s revenue.
Bitature said there has been improvement in revenue collections with the five-year collection averaging 99 per cent as of 2018 from 80 per cent at the start of the concession.
“Umeme has been innovative, implementing technologies like pre-paid metering and network automation to improve our service experience,” Bitature said as he also introduced new members on his board that embodies national and foreign faces mingled to attract international financing but also push the company forward.
“…I am pleased to note the willingness of government to engage with the company and agree on terms of an extended concession,” Bitature told journalists when asked to brief them on the latest about the negotiations at hand.
Investment in the distribution network
The financial statement shows that during the year ending 2018, UMEME invested Shs231 billion in the distribution network, leading to the cumulative investment of Shs2.3 trillion over the last 14 years. “We recognise the urgency of additional investments required in the network on account of increased generation capacity and the implementation of the mile connections programme,” Bitature said.
Umeme has also been able to double the size of the distribution network to 33.146km of distribution lines and over 12,500 transformers at the end of 2018. He said this has made the electricity distribution network to be more safe, reliable and efficient.
Extension of the concession beyond 2025
Both Bitature and Umeme Managing Director Celestino Babungi reported that there good signs that government could extend the concession beyond 2025 when the current one ends. They said the company would unlock funding opportunities for long term capital to finance projected investments worth US $450 million for the next six years.
As part of future plans the two Umeme gurus said the company was looking at investing in concrete poles which last for 40-50 years as the company progressively does away with wooden poles which have various disadvantages of rotting as well as burning during bushfires.