Umeme says it leaves behind a $700 million revenue business growing at an average of 10%. It however warns that Uganda will run out of power in the next three years if more generation capacity is not built.
Umeme Limited on Monday
finally relinquished assets and the control of electricity distribution in the country.
The electricity distribution
was reverted to Uganda Electricity Distribution Company Limited (UECDL) under
the concession that has been running from 1st March 2005 and elapsed
at midnight of 31st March 2005.
The handover of what has
been described as big switch was witnessed by the Energy and Mineral Development
Minister, Ruth Nankabirwa, State Minister for Energy, Sidronius Okaasai Opolot,
other technocrats at the Minister and the Electricity Regulatory Authority led
by Engineer, Ziria Tibalwa Waako.
Some of the speeches
at the handover even sounded like obituaries told at the demise of a prominent elder
in a home or an emerging leader.
To many, Umeme Limited will have an indelible
mark on Uganda’s electricity distribution network despite recent public outcry
about the buyout amount claimed as the 20-year concession came to the end.
Selestino Babungi, who
has been the Managing Director at Umeme for over a decade in trying to sum what
the company has done in the last twenty years, said the company was in 2005
given a very small switch. “Now we are giving back a very massive big switch“he
said.
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As Umeme exists,
Babunji said they have tried to address most of the challenges that existed
before it was awarded the 20-year concession.
These, he said included few
connectivity, challenge in terms of efficiency, few connectivity of people to
electricity and limited technical capacity the electrical supply industry among
others.
“And the whole sector was deemed not commercially viable. That led to
the past reforms made twenty years ago,” he said.
What has Umeme Left Behind?
Babunji when Umeme was handed concession,
the government was seeking for the private sector to invest in power
distribution network. He said cumulatively, over USD 850
Million was invested in the sector until end of the
concession.
“The network
has more than doubled, you handed over 5000 transformer zones, we are giving
back 170,000 transformer zones, 34000 kilometers of lines, you gave me a quarter a million customers,
I’m giving you nine times that.2.2 million customers” Babunji reported.
He also
highlighted energy loss reduction by Umeme as the key millstones.
“We
may take it lightly but this eats into the financial viability of the sector.
In the past we had 35% energy losses, we are handing over 16%” he stated.
In financial
terms, Babunji said the distribution network was in 2005 generating 160 billion
shillings and that the sector is currently generating 2.5 trillion shillings.
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“‘It
is a $700 million revenue business growing at an average of 10%. That is what
we are handing over and we believe that should be protected because it can
attract investments upstream, downstream and in generation he suggested.
He further
stated that Umeme is handing over a growing sector. “What is very important is that we see some
sectors grow in the negative. We are selling five times volume power compared
to the previous time when we started” he revealed.
Is
the network falling apart?
There
have been suggestions that Umeme is exiting the market when the network is
falling apart. Some have suggested that the disruptions or power outages because
of asset stripped. Babunji denied that the network is falling apart but it is
carrying 70% more power than five years ago.
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“We
are loading the network with a lot of power without opening the arteries to carry
that power. That is the challenge we are facing” he explained.
Babunj
said Umeme has in the last twenty years built a foundation in the power distribution
in which the next operator should build on.
“My biggest
challenge is the rate at which power is being demanded. If we don’t do anything
in the next three years, we will run out of power”
Umeme
Limited Board Chairperson, Patrick Bitature said there is still a bit of work
to do in terms of negotiating the buyout amount as the concession ends.
“Some
people fee that the negotiations have got to continue. Yes they have are going
to continue. And I need to assure my shareholders. That buy out amount is not
what they expected. But that s for another day,” he said.
The government paid Umeme Limited $120 million last week but
Umeme claims it is owed $234m. Umeme has a contractual obligation to support
Uganda Electricity Distribution Company Limited during the next six months.
Change of guard Umeme Staff change uniform
Come Thursday 1st April, power consumers are likely
to see most of the former employees of Umeme back into their offices save the
color of uniforms.
Uganda Electricity Distribution Company Limited Managing
Director, Paul Mwesigwa said all the jobs outlined in the new structure as approved
by the ministry of Energy have been filled by former Umeme employees.
“We believe we have the best team to take on the mantle and
the exercise” he said.
He revealed that two thousand seven hundred and ten former employees
of Umeme Limited have been absorbed in by UECDL.
“We are still remaining with eleven
positions that we are trying to manage. But we believe that by the end of business
today, we shall be in position to conclude that from the team” said Mwesigwa whose
company has just received $74 million to carry on the new mandate.
He said all the assets of Umeme have been audited and registered
in UECDL’s accounts.
