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Umeme secures $70m for investments in the distribution network

Manuel Moses, the International Finance Corporation Country Manager (left) and Patrick Bitature, the Umeme Board chairman, exchange the signed agreement for the $70m funding at the Kampala Serena.

Kampala, Uganda | THE INDEPENDENT | Uganda’s electricity distributor, Umeme Limited has secured a $70m (Ushs .258 billion) funding to support its planned investments in the electricity distribution network.

The International Finance Corporation (IFC) was the lead-arranger in the syndicate including Stanbic Bank Uganda Limited, Standard Chartered Bank and the Dutch Development Bank (FMO).

Selestino Babungi, the Managing Director, was pleased with the conclusion of the fundraising process, as the funds shall be invested in the distribution network. The will help expand the system, refurbish worn out components of the network, drive efficiencies and lead to increased electricity connectivity.

He emphasized the continued need to invest in key priority areas to unlock demand in light of increased generation capacity as the 600MW Karuma HPP is about to be commissioned.

The targets include improve the quality and reliability of supply in high growth areas, double electricity connections to 3.2 million customers by 2025, reduce energy losses to 13% by 2025 and rollout pre-paid metering to the remaining 230,000 post-paid single phase customers. This will see deployment of technology to improve general customer experience, while ensuring safety of staff, contractors and the general public.

He said investments in the distribution system positively impacts Umeme service provision to consumers and the economy in general.

Since 2013, Umeme has invested over Ushs. 1.7 trillion (US$ 460 million) in the distribution network, resulting into growth in customers numbers to 1.4 million from 0.6 million customers

It has also seen a reduction in energy losses to 16.6% from 24.3%, rollout of pre-paid metering to over 1 million customers, improved supply reliability, improved customer experience and efficiencies through use of technology, and a 7% annual growth in electricity sales.

Patrick Bitature, the Chairman of the Umeme Board, said, “This funding will allow Umeme to continue investing in the distribution network to enable the Company support the Government in achieving its short and medium term goals for the electricity supply industry. Umeme has proved that the private sector can be an effective and efficient vehicle to raise and deploy capital that compliments government fiscal resources in provision of social services to the citizens. The company has invested over US$ 600 million since the start of the concession.”

He said the company is in discussions with the Government to extend the electricity distribution concession beyond 2025.

Once the concession extension is concluded, he added, the company would be able raise more capital to evacuate and uptake the new generation capacity and increase electricity grid connections.

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