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UEGCL records Shs92bn net profit in FY2020/21

Profitability included Shs71bn from foreign exchange gains on Isimba loans

Kampala, Uganda | THE INDEPENDENT | “We yet congratulate ourselves upon the completion of another financial year in which despite the continued Covid-19 disruptions, we were able to make headway as a company,” Eng. Harrison Mutikanga said in his statement about the company’s performance for the FY2020/2021.

Speaking after the company’s annual general meeting held at the Ministry of Finance headquarters in Kampala on Dec.07, Mutikanga, who was flanked by other top company officials said, the company continued to exhibit bottom line profits mainly buoyed by the revenues from Isimba which account for about 82% (Shs139bn) of the company’s income.

He said, the concession income accounted for about 4.4% (Shs7.5bn), while other incomes accounted for 13.6% (Shs23bn). Profit after tax for the year jumped from Shs2.8bn to Shs92bn thus increasing shareholders equity by 12% to Shs832bn from Shs740bn.

But, he said, the profitability included Shs71bn which was from foreign exchange gains on Isimba dam loans. This would therefore imply that the company’s profits exclusively from operations increased from Shs2.8bn to Shs21bn, a growth of 750%.

Meanwhile, the company was able to service its debt obligations on Isimba to the tune of Shs171bn as at June 2021.

Total revenue grew by 4.8% to Shs169.7bn from Shs161bn in FY2019/2020 attributed to the increased income from the electricity generated at Isimba.

Meanwhile, earnings before interest, tax, depreciation and amortization increased 97% to Shs118bn in FY2020/21 from a loss of Shs95bn a year before.

The company’s total assets in the period decreased by 1.4% from Shs7.1trillion in FY2019/2020 to Shs6.96tn.  The decrease, the company said, is due to the depreciation of Isimba hydro power plant which has been in operation since March 2019 and a drop in valuation of the Karuma hydropower project – still under construction.

In the same year, the company with support from the French Development Agency (AFD) undertook a financial sustainability study to further reinforce its pursuits of financial resilience.

“Several recommendations of the study are on the radar for implementation in the financial year 2021/22,” Mutikanga said.

Evelyn Anite, the State Minister of Finance for Investment and Privatization said, “I’m very impressed with them (UEGCL team) for the performance recorded for FY2020/21 in spite of COVID-19 pandemic hit. I give the big kudos and I think they can do better. This is profit for citizens not for an individual.”

The profit was boosted by the completion of Isimba dam whose commercial operations began in 2019. Demand for power also continued to grow which also supported the company’s revenue performance.

Meanwhile, the 600MW Karuma dam commissioning has been set for June 2022, a year when all construction elements will be fully complete. Anite said, government agreed to extend the commissioning date of the dam to allow the contractor to finish and hand over a fit for purpose product.

Overall physical progress at Karuma, during the reporting period, was 98.5%. However, due to implementation challenges, mainly related to non-conformities of the electrical/mechanical systems, the contractor had to request for an extension, which was granted.

The completion of this project will add 600MW to the grid, which will significantly contribute to government’s efforts of ensuring increased provision of affordable, quality and reliable electricity services.

Meanwhile, Mutikanga said, it is unlikely that the contractor will have all outstanding snags at Isimba completed prior to the end of the Defects Liability period slated for March 2022.

He said, out of a total of 440 snags, about 58% (259) remain outstanding, which include electrical cabling, leakages in the power house concrete, incomplete documentation including operation and maintenance manuals, and the absence of a floating boom.

“These are very critical to the safety of the dam and its safe operation,” he said. In terms of human resource, as at June 2021, the company’s staff count stood at 205 compared to 200 as at June 2020. Overall, there is going to be an increment of staff mainly driven by the need to support the business expansion through acquisition of the Namanve Thermal Power Plant, commencement of operations at Karuma hydro power dam and strengthening of safety, health, environment and quality function, according to Mutikanga.

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