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Behind UEGCL’s sharp drop in net profit to Shs2.8bn

L-R: Anite, Ocailap, UEGCL officials during the AGM held at the Ministry of Finance headquarters on Dec.10.

Management is now focusing on ensuring sustainability across its value chain of power generation

Kampala, Uganda | JULIUS BUSINGE | Uganda Electricity Generation Company Limited has reported a sharp drop in profit after tax from Shs25bn in FY2018/2019 to Shs2.8bn in FY2019/2020.

The company executives attributes the drop in profits to the interest expense of Shs31bn towards repayment of the on-lent loan for the 183MW Isimba Hydropower Plant and the Shs15bn loss in foreign exchange losses.

UEGCL is a government agency mandated to establish, acquire, maintain and operate electricity generation facilities. It is also mandated to promote research and development in the electricity generation sector while running the company on sound business principles.

The company is also an implementing agency for the generation component of 183MW Isimba HPP and 600MW Karuma Hydropower projects located in the upstream of River Nile. In addition, UEGCL is also developing small hydro power stations and renewable energy power plants countrywide.

Its revenue increased from Shs66bn in the FY2018/19 to Shs161bn in 2019/2020 supported by an increase in commercial operations at Isimba Hydro Power Plant – which generated Shs126bn in electricity sales. The other revenue source was, concession fees/income which fetched Shs5.8bn.

The earnings before interest, tax, depreciation and amortisation more than doubled from Shs40bn to Shs111bn during the same period under review.

Total assets increased from Shs6.7tn in 2019 to Shs7.1tn as at end of June 2020. This includes work in progress at Karuma Hydro Power project and acquisition of operation and maintenance assets at Isimba HPP.

Similarly, borrowings during the period increased from Shs5.4tn to Shs5.8tn due to accrued principle and interest on the loans advanced by the Export-Import Bank of China for the development of the Karuma and Isimba Hydro Power projects.

Company remains strong

Executives indicated that the company is financially strong, with positive equity of Shs 741billion.

The company also transitioned into full operations and maintenance for Isimba Hydropower plant using its own staff in line with its realisation of its plan to gradually build local capacity to operate and maintain all power plants.

Eng. Proscovia Margaret Njuki, the chairperson Board of Directors said the national lockdown and COVID-19 restriction measures negatively impacted on the company’s operations leading to revenue losses as a result of reduction in electricity demand.

She, however, said the company quickly adopted and executed a response plan with strategies to ensure continuity of critical operations such as the generation of electricity, remote working using reliable online platforms and where necessary, regular testing of staff and implementation of contained measures.

Strategic plan progress

This development comes at the time UEGCL is marking the end of the second year of implementation of the five year (2018-2023) strategic plan with a focus on operational excellence, sustainable growth, stakeholder management and developing an engaged workforce.

However, executives said they have made slight changes in the plan in terms of targets in line with the negative impact caused by the coronavirus pandemic.

The company’s strategic plan is to achieve 1,300MW in line with government’s aspirations of delivering key flagship projects of Isimba and Karuma that are directly and indirectly linked to job creation and growth of the economy in general.

UEGCL’s Chief Executive Officer, Eng. Harrison Mutikanga, said:  “I am happy to report that despite all odds, we once again continued operating on sound business principles with continued profitability albeit a lower bottom line figure.”

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