Eskom Uganda shielded from Group’s troubles

Friday March 20 2015



Workers fix power lines. FILE PHOTO

Workers fix power lines. FILE PHOTO 

By Mark Keith Muhumuza

Kampala. Eskom Uganda has said its operations in Uganda are insulated from the woes going on in its parent company back in South Africa. Eskom Uganda Limited (EUL), is a wholly owned subsidiary of Eskom Holdings, the South African government-owned power generation and distribution company.
In South Africa, the company is facing financial constraints, a probe into operations, poor generation capacity and has plunged the country into loadshedding. Last week, the board placed four members of management, including the CEO on suspension as an investigation into the company’s operations is carried out.
Eskom Uganda, which operates the Nalubaale and Kiira dams – about 40 per cent of installed power in Uganda - told the Daily Monitor that it is no-longer dependent on cash injections from its parent company.
“The initial phase of the restoration and rehabilitation plan required huge capital outlays that came from our parent company in South Africa. However, since then, Eskom Uganda Limited has been operating as a profitable, self-sustaining business here in Uganda with little but reporting obligations to her parent company in South Africa,” Mr Gordon Mwebesa, the finance director EUL told Daily Monitor.
Eskom Uganda used about $6.8m (Shs19bn) of shareholder capital between 2003 and 2007 for rehabilitation of the two dams. By end of 2007, the shareholder loan had been repaid. Mr Mwebesa further pointed out that they have since deliberately leveraged against the resources of Eskom Holdings.
“As such, owing to the set-up of the company and the autonomous structures intentionally crafted for the business to operate as though it were a stand-alone entity, EUL is fully insulated from the challenges that the group is undergoing at the moment,” Mr Mwebesa adds.
In operating and maintaining the two dams, Eskom requires a steady flow of cash. In 2012, the company announced plans to invest at least $20m (Sh57bn) in operating the two dams for at least five years. With the trouble back home, accessing shareholder capital for further investment will not be possible as its finances are in the red, according to ratings agency, Moody’s.
Eskom Uganda has, however, always insisted that investment it has in repairing, maintaining and operating the plant is from retained profit with minimal parental loan facility support.

Eskom’s operations
Eskom Uganda Limited (EUL) is registered, incorporated and domiciled in Uganda. EUL was incorporated on November 22, 2002, and was awarded a 20-year concession to operate and maintain the two hydro power stations - Nalubaale and Kiira power stations - in Jinja. It took over operations and maintenance of the complex from Uganda Electricity Generation Company Limited (UEGCL) on April 1, 2003.

mmuhumuza@ug.nationmedia.com

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