Umeme would like to congratulate the government for having successfully gone through the 2019 Manifesto Week that run from May 13 to 24, 2019. We particularly would like to applaud government for having attained a mid-term manifesto implementation score of 62 per cent to date, according to the Prime Minister, Dr Ruhakana Rugunda.
There are a number of milestones presented by the various government ministries, departments and agencies, some of the key highlights such as the commissioning of the 183MW Isimba Dam and the expected commissioning of the 600MW Karuma Dam - altogether raising Uganda’s generation capacity to 1,767MW by end of 2019.
Government’s revival of Uganda Airlines, completion of the state-of-the-art Neo-natal and Specialised Women Hospital at Mulago as well the expansion of Entebbe International Airport and the rehabilitation of Mulago National Referral Hospital, both of which are on course, are also key achievements.
We were also glad to learn that the country’s tourism foreign exchange earnings grew by 18 per cent from $1.37b in 2015/16 to $1.63b in 2018 as a result of a 19 per cent growth in tourist arrivals, from 1.3 million to 1.54 million in the same period. This led to a 25 per cent increment in employment from 504,000 jobs to 628,000. In the three years, Uganda’s exports also grew by 24.7 per cent from $2.9b in 2016 to $3.6b at end of 2018, as a result of growth both in local and international investments. Foreign Direct Investments (FDI) increased by 12 per cent from $626m in 2016 to $700m (Source: UNCTAD).
Private Sector Confidence Index in the economy as measured by Bank of Uganda has also grown from 53.6 at the beginning of 2016 to 58.6 (April 2019) on the back of better prospects.
Thanks to these and many other achievements, real GPD growth, according to the IMF has improved from 5.8 per cent in 2017/2018 and is expected to reach 6.2 per cent this financial year. It is then projected to grow at an average 6.2 per cent for the next five years as result of government’s continued investments in infrastructure. The IMF, in their recent May 2019 Country Report on Uganda, estimates that if (infrastructure) investments proceed as planned, growth could range between 6 and 7 per cent over the next five years (3 to 4 per cent in per-capita terms).
Umeme is proud to power all these achievements. Umeme, is particularly proud of being government’s partner in powering all these achievements. In the last 13 years, Umeme has invested $627m (Shs2.4 trillion) into doubling the distribution network to more than 34,000km from the 16,000km we inherited, and growing customer connections by more than four times- from the 290,000 inherited to the current 1,291,811.
Specifically in these last three years alone, Umeme has invested Shs784b, which has among many other achievements, allowed us to grow the number of customers by 63 per cent from 793,544 customers at the beginning of 2016 to 1,291,811 at end of 2018. Particularly- commercial consumers (extra-large, large and medium industrial and commercial) grew by 63 per cent from 69,748 to 113,579 customers.
Suffice to add is that in line with government’s strategic goal to continue this steady progress, and take Uganda to modernity through jobs creation and inclusive development. Worth noting is also the fact that the number of direct jobs created by Umeme during the three years increased by 12 per cent from 1,348 to 1,514 employees. More significantly, Umeme continued reducing the number of expatriates from 13 at the beginning of 2015, to six in 2016 and four at the end of 2018 - as more Ugandans assumed more senior roles in the business, as a result of a deliberate skills transfer process.
Indeed in 2015, we appointed our first Ugandan as managing director, Mr Selestino Babungi.
With all the investments cited above and improvements in the electricity sector, it is no wonder that according the Uganda National Household Survey 2016/17 by Uganda Bureau of Statistics, 27 per cent of Ugandan households (50.1 per cent urban and 17.5 per cent rural) reported that improved electricity had made their lives better. Better electricity came second to improved transportation services (34 per cent). In the third position was development projects (25 per cent), construction of new roads (25 per cent ), construction of new schools (18per cent) and new employment opportunities (14 per cent).
Umeme would like to acknowledge the far-sighted leadership of President Museveni who is championing transformative infrastructure investments, especially in the energy and transport sectors, that has formed the stimulus for much of the achievements enumerated above. We would also like to acknowledge the guidance from our direct regulators, the Electricity Regulatory Authority (ERA), and indirectly the ministries of Energy and Finance, who together with our generation and transmission partners, have made it easy to come thus far.
The next five to 10 years will be very critical in the country’s energy sector. Uganda will soon have 1,767MW once Karuma comes on board, and to absorb this extra capacity, government, has already set a noble goal to extend power to 30 per cent of the population by 2020 and 80 per cent by 2040. This goal is being supported by an equally ambitious free connections policy, targeting 300,000 new connections per year. This means Umeme’s customer base must have crossed the 4 million-mark by 2017.
From our estimates, achieving the above targets, shall require significant investments focusing on uptake of new capacity, increased access, and driving efficiencies in the business operations. The resulting large geographical footprint shall require opening more service centres, building more substations, extending lines, injecting more transformers and recruiting more people on the ground.
Over the next six years, we estimate that up to $450 million is required for capital expenditures.
According to recent estimates by the Ministry of Energy, when Isimba and Karuma dams are commissioned and fully absorbed/utilised, it is expected that the weighted generation tariff will reduce from the current US Cents 6.47/kWh (Shs243.43) to US cents 5.34/kWh (Shs200.93), representing a reduction of 17.45 per cent, which shall be reflected in the end-user tariffs. Uganda has tasted the wrath of underinvesting in the sector before, hence we should not wait to get to where Kenya and South Africa are today. Never again!
Mr Bitature is the board Chairman, Umeme Limited