Umeme sets targets for last term of concession

Kampala. Power distributor, Umeme has filed an application for amendment of its supply licence proposing performance targets for the last seven years of its 20-year concession.
The licence, which is reviewed every seven years, will run between 2019 and 2025.
Umeme, is required by a stipulation in its supply licence to undergo a periodic review of the tariff performance targets which include distribution, operation and maintenance costs.
It also provides for uncollected debts and distribution losses.
“Before the end of the 7th year, 14th year after the transfer date, (2005), the licencee shall submit and [Electricity Regulatory Authority] will approve a new set of distribution, operation and maintenance costs,” the supply licence provision, reads in part.
In the application, Umeme has proposed an energy loss trajectory of 15.24 per cent in 2019, 14.63 per cent in 2020, 14.75 per cent in 2021, 14.5 per cent in 2022, 14.23 per cent in 2023 and 14.36 in 2024.
Energy losses are divided into the technical and commercial. While technical deal with cases where people illegally connect to the grid, commercial losses are those incurred by the company while evacuating power usually because of the tear and wear of equipment such as conductors, wires and poles.
The power distributor also requests that in 2019, ERA sets targets for operating costs worth Shs235b, Shs255b in 2020, Shs274b in 2021, Shs287b in 2022, Shs299b in 2023, Shs317b in 2024 and Shs338b in 2025.
This is contrary to the previous years whose range was about Shs150b.
According to Mr Julius Wandera, the ERA communications manager, the anticipated increase in operating costs stems from increase in staff, technology innovations to distribute and monitor the growing customer base.
For target of uncollected debt factor, explained as the percentage of the total revenue billed but not collected, Umeme proposed that ERA considers 1.3 per cent in 2019, 1.15 per cent in 2020, 1.1 per cent in 2021, 1.05 per cent in 2022, 1.03 per cent in 2023 and 1 per cent in 2024.
Since 2005, Umeme’s energy losses have exceeded ERA targets by an average of 1.5.
However, there was a spike in losses in the periods leading to 2010, recording an all-time high in difference of 4 per cent in 2007.
The loss, which was seen after Umeme recorded 35.3 per cent against ERA’s energy loss target of 31. 3 per cent, Mr Wandera said was the period of transitioning from Uganda Electricity Board, in 2005 which was characterised by exhausted equipment and high load shedding.
The graph since 2005 has been cascading from 30 per cent to 14 per cent in 2018.
The power distributor, however, has attained its targets in revenue collection for the last 13 years.
While ERA anticipated a 97.3 per cent collection rate, Umeme collected 100 per cent in 2013, and has maintained the upward streak since then.