According to the 2020 financial results, there was a decline in total revenues by 7%, with electricity sales declining by 3%, on top of government's suspension of the Electricity Connection Policy in December.
Electricity Company Umeme Ltd has posted a net profit of 41.1 Billion
Shillings from its 2020 operations. This is a decline of 69% from the 139.2 Billion
Shillings it recorded in the year 2019.
The huge fall in the profits is largely attributed to the effects
of covid 19 over most of the year, which saw the government shut down most of
the economic activities for three months from April to June, before starting to
gradually ease the lockdown.
According to the 2020 financial results, there was a decline in
total revenues by 7%, with electricity sales declining by 3%, on top of the government's
suspension of the Electricity Connection Policy in December.
By June, Umeme had already stopped implementing the policy June
because the government had stopped releasing funds to the distribution
companies that were implementing it, and these had accumulated to about 100
Billion Shillings.
Revenues under the ECP fell by almost three quarters to 54 billion shillings,
compared to 190 billion the company received in 2019.
The free connections resumed this month after the government
secured funding from various lenders for a phased implementation.
On Monday, Umeme, through the Uganda Securities Exchange informed
the market of the likelihood of a fall in profit by more than 60%, attributing
it to the effects of the pandemic, suspension of the ECP as well as what they
called regulatory lag.
“Shareholders and potential investors are advised to exercise
caution while trading in the Company’s shares. The Company is optimistic that
the recovery in the business environment as Government’s response to the
pandemic will support stronger operational and financial performance in the
year ahead,” says the statement by the company secretary, Shonubi, Musoke &
Co. Advocates.
Other companies implementing the ECP are the Uganda Electricity Distribution Co
Ltd, Kilembe Investments, Pader Abim Community Multipurpose Electricity
Cooperative Society, West Nile Rural Electrification Company Limited and Kalangala
Infrastructure Services.
The decline in the other revenues was mainly due to the closure of
industries during the lockdown, while others reduced the number of working
hours, which led to lower demand for electricity.
There was a 16% increase in the consumption of a few large
industrial customers which reportedly increased output due to demand for their
products like still, when imports stopped coming in due to closure of borders,
according to Umeme Managing Director Celestino Babungi.
The financial statements also show an increase in the cost of
operations by 6%, mainly driven by the repairs of equipment and networks, as
well as implementing the standard operating procedures against covid 19.
The company says that they are fast-tracking the migration of
operations from manual to ICT platforms and this will enable them to cut costs
further.
During the year, the company generated 277 Billion Shillings in
cash up from 94 Billion Shillings in 2019 from operating activities.
This was used to partly fund new investments, dividends and other
financial obligations.
“We invested 279 billion shillings in capital projects, building and upgrading
seven substations, constructing distribution integration lines with
transmission infrastructure, expansion of distribution transformer zones,” says
the statement signed by Board Chairman Patrick Bitature.
It adds that they also converted 168,000 customers to prepaid metering, bring
the total to more than 96% of the total consumers to Yaka.
The company has set aside 12.2 Shillings per share to be given out
to shareholders in dividends, subject to approval by the shareholders at the
next Annual General Meeting, and subject to taxes. In 2019, the shareholders
got Ushs 41 per share.
The company also hopes that the government’s response to the
pandemic and the vaccine rollout will lead to further economic recovery and
improve the operating environment.
They also pray for the conclusion of the licensing renewal process
in the company’s favour.
“The resolution of the concession extension beyond 2025 is
fundamental in unlocking long-term capital for investment in the distribution
network to evacuate new loads, increase access, improve the quality of supply
and reduction of technical losses,” says Bitature.
On Monday, Umeme and the police re-launched a countrywide
operation against electricity theft and illegal connections, which they say
have an economic cost to the company of 100 billion shillings per year.
These acts also resulted in losses of 17.5% of the total
electricity supplied.
