Umeme Uganda’s major hydro power supplier recently released its unaudited interim condensed financial results for the period that ended in June of 2022. This covers the past six months of the utility company’s operations.
As is the norm for many corporations in Uganda and elsewhere, half-year results are an indication of a company’s mid-year progress as they brace for the rest of the months to wind down the year.
According to Umeme, the total electricity sales increased by 9% to 1.875 GWh amidst a reduction in energy losses to 17.1% as compared to 17.9% for 2021, as power consumption in the domestic, commercial, medium and large Industrial consumer segments posted double-digit growth.
Even with a tough economic situation that was partly induced by COVID-19 and other deterrent factors, Umeme managed to record an impressive boost in demand for its services. In the face of a challenging macroeconomic environment, the electricity sector proved very resilient and posted a 9% increment in energy demand. This was a result of the reopening of the economy in January of 2022.
This financial statement as signed by Umeme Limited’s top management which includes Chairman Patrick Bitature and Managing Director Selestino Babungi reveals that “The economy was on course for a strong rebound at the start of the year, helped by higher domestic demand amidst the easing of pandemic-curbing restrictions.”
Consequently, electricity sales to customers increased by 3.2% to Ush876.4 billion in comparison to Ush849.2 billion in 2021.
The company’s operating profit grew by 21% to Ush100 billion as compared to Ush82 billion in 2021 driven by performance on gross profit and operating costs.
“However, the challenging global environment in the wake of the geopolitical conflicts has led to inflation, supply chain disruptions, depreciation of the Uganda Shilling, an increase in interest rates and a generally weaker operating,” the mid-year report reads in part.
With all these half-year developments and achievements, Umeme states that “Growth in electricity consumption in the extra-large Industrial category was flat at 0.7%.”
Umeme also acknowledges that despite inflationary pressures in the economy, Operating Costs reduced by 6.5% to Ush115 billion as compared to Ush123 billion in 2021. This was attributed to the reorganisation of the business during the period and efficiency gains from the company’s continuous investments in technology.
Umeme’s Profit After Tax increased by 33% to Ush64 billion as compared to Ush48 billion in 2021 and Earnings Per Share increased to Ush39.6 from Ush29.7 for the same period in 2021.
As of June 30, 2022, Umeme’s net debt decreased by 20% to Ush268 billion compared to the closing balance at the end of last year which was Ush337 billion by December 31, 2021. This followed a scheduled repayment of Ush90 billion.
There was a 21.7% increment in the Net Operating cash flow which rose to Ush187.4 billion as compared to Ush154 billion in 2021.
Umeme made an investment worth Ush55.9 billion which was spent in improving the distribution network.
The power company’s stance on dividends is that in line with the previous interim periods, the company’s strategy will be to pay scheduled term debt and to fund ongoing capital investments in the distribution system for efficiencies and improvement in the customer experience.
“As a result, the Directors do not recommend the payment of an interim dividend,” reads an excerpt from the statement.
During its half-year duration, the company recorded six fatalities on the distribution network, which they say were caused by network interference, power theft and illegal operations by unauthorised people.
The company has subsequently made an appeal to the public to report unsafe networks power thefts, vandalism or unauthorised network operations through Umeme’s multiple service channels some of which include social media and other platforms.
Recent Company Highlights
In June this year, Umeme allocated US$3 million (Ush11 billion) for power reliability projects in several districts located in Eastern Uganda namely; Jinja, Lugazi, Kamuli and Iganga districts.
This mega fund is aimed at enabling Umeme to replace rotten poles and string cables on the Lugazi Town, Jinja–Kamuli and the Iganga–Kibimba power distribution lines.
The power company stated that it is prioritising such projects across Uganda to speed up economic growth.
“We are injecting in US$3 million (Ush11 billion) to address the power supply challenges of the line from Jinja, all the way to Kamuli and solve power supply challenges from Iganga to Busitema,” Babungi, the managing director, said during an engagement between Umeme and security and political leaders on June 21, 2022, in Iganga District.
“Once we do those works, power will be more reliable. It is our desire that you get reliable service from Umeme,” SBabungi said in June this year.
The Kamuli district RDC Rose Birungi said just like security, electricity is a prerequisite for development.
Birungi said that despite all the expected inconveniences that will occur during the implementation of the project, the beneficiary districts in Eastern Uganda and the implementing corporation Umeme are both hopeful that service would improve once the works are completed.
Umeme’s Execution Manager, Robert Mubiru said that works would begin in July and progress until November 2022.
According to Mubiru, there might be a few planned power outages to enable the contractor to carry on with work without risk of accidents this was expected to occur during the implementation.