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Umeme profits drop
Members of the electricity distributor Umeme's maintenance team on duty. FILE PHOTO
What you need to know:
- President Museveni has instructed that Umeme’s contract, which is due to lapse in seven years, should not be renewed.
- Already, lobbying to extend the contract of the Umeme is underway, with the president’s threat to source for an alternative power distributor only serving to intensify the efforts.
Kampala: The profits of power distributor Umeme have dropped from Shs138 billion in 2016 to Shs35 billion last year, according to official accounts of the company’s performance.
In spite of the dip, Umeme plans to pay shareholders Shs7.6 per share in dividends for the year ended December 31, 2017, subject to approval of the annual general meeting.
President Museveni has instructed that Umeme’s contract, which is due to lapse in seven years, should not be renewed.
While releasing their annual results last Friday in Kampala, the Umeme managing director, Mr Selestino Babungi, said discussion with the president and other government officials is going on “smoothly”.
“We will continue to engage until we all arrive at a win-win situation for the country,” he said.
Although the President in a March 12 letter debarred negotiation on the matter, this newspaper can reveal that he was as of last Friday scheduled to meet Umeme senior management team for the second time within a week.
Country deserves better
Mr Museveni ruled out any talks regarding renewal of Umeme’s contract, arguing that the country deserves better in terms of affordable electricity than what it is getting now from the country’s main electricity distribution company.
And for that, he directed that another company be sourced on condition that it will provide affordable electricity currently available in about 20 per cent of the country.
Umeme’s power distribution concession is due to expire in March 2025.
According to the law regulating the power sector, a concessionaire can, three years to the expiry of its concession, apply for a renewal.
Already, lobbying to extend the contract of the Umeme is underway, with the president’s threat to source for an alternative power distributor only serving to intensify the efforts. Umeme would not lose whatever the outcome of the negotiation, according to officials.
If, for instance, the power distributor’s contract was terminated immediately, the government would lose at least Shs1.6 trillion in compensation.
And should the contract run out naturally, still Umeme will have to be paid in cash to recoup the value of its investment it has not recovered.
