Uganda power distributor Umeme Limited has attributed the constant power outages that leave hundreds of Ugandans in the dark to global warming.
During a stakeholders’ Annual General Meeting (AGM) at Sheraton Hotel on Thursday, Chairman Board of Directors Patrick Bitature said the national electricity grid could not handle increasingly stronger storms caused by climate change.
He said the biggest concern from shareholders was the increased power outages in certain parts of the country including Kololo and Naguru which is a result of trees and branches coming into contact with overhead lines and poles in spite of the shrub and branch clearing done by the company.
“The environment we are living in today has changed considerably and we have taken cognizance of that. The winds we have are much stronger today in Kampala, we are not used to these gale-force winds and heavy rains,” said Bitature.
Bitature however, noted that UMEME has improved the distribution efficiencies from 50% to 80% through the reduction of energy losses from 38% to 19% in 2016 which he attributed to the company’s anti power theft campaign dubbed as “Wuuyo.”
“Over the last 10 years, Umeme has improved the distribution efficiencies. These ensure financial sustainability of the sector operators and positive contribution to effective tariff reductions,” said Bitature.
Bitature stated that the Energy losses averaged 19.0 per cent is below the regulatory energy target of 16 per cent pledging to work towards the company’s long ambition of reducing energy losses to single digits.
Bridging the electricity access agenda
Bitature noted that Uganda is among the countries with the least electricity penetration rates, with 21% of household using electricity, with 16% on the national grid. He said the main limiting factor to increasing electricity penetration is the size and capacity of the existing grid, with sizeable capital investment required.
“Our investment plans for the next period cover both the expansion of the distribution infrastructure and improving efficiencies,” stated Bitature, adding that “the alignment of our plans to upcoming generation, post commissioning of Isimba and Karuma Hydro power dams, is key to the continued financial sustainability of the electricity sector.”
Karuma and Isimba Hydropower Projects (600MW and 183MW respectively) are expected to be commissioned by December, 2018.
Bitature expressed optimism that the completion of the two dams will accelerate customer connections hence leading to social and economic transformation of Uganda.
Weak economy affects UMEME’s profitability
Umeme, partly owned by the U.S.-based Investec Asset Management, Actis LLP and NSSF Uganda recorded a 6 percent decrease in its net profit according to its financial review report.
Umeme registered a net profit after tax of Shs100b in 2016 down from Shs106b in 2015, driven by Earnings before interest, tax, depreciation and amortization (EBITDA), as well as increased financing costs.
The managing director of UMEME, Selestino Babungi said the slow growth characterized by the poor financial performance was due to the uncertainty that came with the 2016 presidential elections and the high commercial rates.
“The manufacturing sector grew by less than 1 percent hence the slow down in industrial activity. This is because we had elections. So, major industrial players withheld their capital investments or production schedules,” stated Babungi, adding that the geopolitics particularly political instabilities in South Sudan and Burundi are partly to blame being export markets of UMEME customers.
Based on this performance, the Annual General Meeting unanimously approved a recommendation by the board to give a final dividend of Ushs 7.8 per share leading to a total dividend for the year of Ushs 18.8 per share. The dividend shall be paid on 5th July 2017.
Customers on pre-paid metering increased to 65% of the total customer base compared to 52.2% in 2915. Turn over from pre-paid customers in 2016 was 16% and projected to continue rising as more customers are converted to the pre-paid metering system.
The 5th Annual General meeting also approved the extension of the term of office for members of the Board of Directors’ chaired Bitature for another year.