Technology, network expansion and investments in a new pole plant will drive revenues up going forward, executives say
| JULIUS BUSINGE | Uganda Electricity Distribution Company Limited has reported a sharp rise in revenue from Shs54bn in FY2017/2018 to Shs70bn in FY2018/2019 citing increased electricity network in rural areas.
Paul Mwesigwa, the company’s managing director said at a press briefing on Nov.05 that the drop in operational losses from 29% to 20.1% during the period under review also helped the state-owned agency to register good performance.
UEDCL operates various businesses including leasing out its electricity distribution infrastructure to Umeme, electricity pole plant operation and electricity distribution in eight territories dotted countrywide under the management agreement with Rural Electrification Agency.
However, each business unit reports its own performance annually, according to the company executives.
UEDCL financial performance also shows that while its operating revenues increased by 32.5%, total expenses increased by 39.7% thus leading to 8% decrease in EBTIDA during the period under review.
This, according to Mwesigwa was mainly due to an increase in staff numbers from 313 to 342 in order to comply with the field operational safety standards as the business expanded.
There was also an increase in the network repairs and maintenance costs from Shs3.2bn to Shs7.0bn as a result of poles and transformer replacements.
UEDCL had a power distribution loss of 20%, which is 2% above the 18% loss target set by the regulator during the FY2018/19.
The remaining power loss of 14% resulted from losses that accrued from evacuating small and mini hydros that do not have transmission infrastructure but rather use the company’s 33kV lines to evacuate power.
However, overall, UEDCL recorded 34% loss as it strives to achieve at least 18% power losses.
Challenges still remain
The company, however, had a number of fiscal challenges including Umeme’s failure to pay lease fees for the leased assets arising from depreciation and return on equity owed to the fact that Electricity Regulatory Authority is yet to give a go-a head.
This led to the depletion of the national assets leading to a net loss of Shs.9.6bn and a decrease in the shareholders’ funds from Shs.211.5bn to Shs.201.9bn.
The Independent understands that Umeme has not paid lease fees as per the terms and conditions in their contract since 2011.
Umeme was supposed to pay approx.Shs16bn per year, which translates into Shs2.3trillion for the entire period since 2011.
Julius Wandera, the spokesperson for ERA told The Independent that the government is aware of the outstanding bill.
He, however, said the regulator is yet to approve the payment because it would cause a jump in power tariff, making electricity unaffordable to consumers.
The good thing, he said, is that the assets in question are public or belong to government and will not go away.
In the meantime, Mwesigwa said UEDCL has invested heavily in technology as well as human resource to keep afloat.
UEDCL adopted the government financial year and changed its reporting effective July 1, 2017, in which it recorded an increase in revenues from Shs17.2bn in 2017 to Shs54bn in 2018.
Mwesigwa said, UEDCL is aspiring to address the current demand response and network capacity to supply customers with energy that they demand with a very high degree of confidence.
“We have put in place systems to secure operating space, and is able to withstand shocks to its technical equilibrium,” he said, in reference to the UEDCL’s 93% power availability in the service territories against a target of 95% in the period under review.
The company also achieved a positive performance through hands-on service delivery via the 42 sub-offices in their service areas, and has enhanced its emergency response mechanism through fast communication platforms such as social media and a toll free line.
Pole plant, UEDCL Towers
The company’s plant recorded a 39% surge in pole production to 25,733 compared with the previous year citing increased internal utility poles consumption.
On the other hand, UEDCL Tower which also houses the company’s headquarters in Kampala, saw its occupancy rate and tenants’ retention increase from 83% to 100% due to good customer care and efficient service delivery.
“We continue to put in place more marketing and customer care initiatives to maintain the occupancy rate at 100% above the market property business competition,” Mwesigwa said.
Mwesigwa said UEDCL now plans to expand the pole plant on the 75 acre piece of land in Wakiso District worth three production lines to produce up to 100, 000 pieces including concrete poles per year.