Umeme recovers from reduced profit growth

Umeme has recovered from reduced profit growth, increasing its margins to Shs61b for the year ended June 30, 2018 down from Shs35.5b for the year ended December 31, 2017.
The power distributor had suffered a profit slump in 2017 registering a massive decline of Shs35.5b up from Shs138.8b for the year ended December 31, 2016.

The Shs61b profit was attributed to increase in power demand and the introduction of the prepaid metering system that has seen the company drastically lower its operation costs, especially in regard to collections.
The performance, according to the financial report, was also a result of increased power demand for industrial consumption.
Mr Selestino Babungi, the Umeme managing director, while releasing the results for the year ended June 30, 2018, said the power sector had experienced good growth in the period under review, which has helped the company to connect more than 82,373 in the period.

“The main drivers are the large industrial consumers who are registering high annual growth of up to 13 per cent,” he said.
The company has in the period connected about 46 industrial consumers including newly commissioned National Cement and Hima Cement plants.

Other companies such as Coca- Cola and Roofings have boosted industrial power demand with expansions. Currently, power growth is tagged at 11.3 per cent.

Customer connections have grown to about 1.2 million and the company expects to connect at least 200,000 new customers by end of the year.

Revenue collections during the period peaked at 102.8 per cent with total collections standing at Shs768.3b down from Shs704b last year.

This was due to the effective rollout of the prepaid metering system, recovery of past debt, timely payments of industrial customers and a 24-hour payment system.

The prepaid metering system, commonly known as Yaka increased to 76.3 per cent of the customer base, accounting for 24 per cent of the company’s total revenue while smart metering for government institutions as at June 30, had been installed in 327 of 469 government institutions.

Mr Stephen Illungole, the Umeme media relations manager, last week told Daily Monitor they were engaging government to convert all connections to prepaid system by December.

However, despite reduced costs on collections, the company’s operating costs increased by 13 per cent to Shs105.6b, mainly due to repairs and maintenance on distribution network safety and supply reliability in anticipation of the rainy season.
The company invested Shs113.3b down from Shs99b in the period, mainly in network expansion, energy loss reduction and additional customer connections.

Some of the projects, Mr Babungi said, include upgrading of the Kampala Industrial Park at Namanve, Gulu, Ishaka, Nyakesi substations as well as the Kawanda-Kapeeka Industrial Park among others. These are mainly targeting the industrial investors.

The company also announced a reduction in energy losses that fell to 16.7 per cent up from17.5 in the period under review.

UNDER REVIEW
Mr Julius Wandera, the Electricity Regulatory Authority public relations officer, told Daily Monitor, a consultant is currently auditing Umeme’s performance for the last seven years and is expected to release a report next month.

The report will compare the performance with set parameters such as energy loss reduction and revenue collection. It will be used to set new parameters for the remaining seven years of the concession.