KAMPALA- Power distributor UMEME’s financial performance released at the weekend has revealed a 9.3% growth, MediaScape News exclusively reports.
Over the past six-months, UMEME’s revenues increased to Shs 928 billion from Shs 849 billion for the same six months in 2020.
Selestino Babungi, UMEME’s Managing Director (MD) attributes the growth to increased electricity demand across all consumer categories following reduced restrictions after the 1st wave of Covid-19.
Gross profit
This increased by 28.7% in the six months to 30 June 2021 to Shs 299 billion compared to Shs 232 billion in 2020, according to the statement.
UMEME Chairman, Patrick Bitature attributes the increase to investments in growth and reliability related projects coupled with increased demand from existing and new customers.
Operating costs
Documents we have seen show that the operating costs increased by 12% to Shs 123 billion from Shs 110 billion in 2020. This is because there was an increase in overall business activities to comply with Covid 19 directives, repairs and maintenance of the network and impairment of receivables in light of constrained economic activities.
Finance costs
Papers show that finance costs declined by 15.4% due to the decrease in interest rates on UMEME’s long-term facilities: during the period it was 5.26%, down from 6.92% in the same period last year.
Earnings Before Interest Tax Depreciation and Amortization (EBITDA)
Details show that EBITDA strengthened by 48% to Shs 173.8 billion compared to Shs 121 billion in 2020.
Net profit: More than doubled to Shs 48.2 billion compared to Shs 21.8 billion in the interim period to June 2020.
Capital Position: Babungi says that UMEME has fully drawn down and utilized the debt raised in late 2019 to bolster the distributor’s investment programme over the past 18 months. According to Babungi, the long-term gross debt at the close of June 2021 stood at USD 120.3m, down from USD 144.3m as of 31st December 2020.
Cash flow: Net Operating cash flow improved to Shs 153.5 billion from Shs 24.1 billion in
2020 and this is attributed to the improved profitability, recovery of outstanding ECP revenues, working capital efficiencies and lower financing costs.
Bitature says capital expenditure in the period eased to Shs 49.6 billion against the Shs 77.7 billion invested in the six months to June 2020.
Operational Performance
“The health and safety of our staff, contractors, and the public remain our top priority,” Babungi says. Since the emergence of COVID-19, “we have adapted the business operations to ensure compliance with guidelines and directives issued by the Government to protect our staff while continuing to deliver our services.”
However, UMEME regrets 5 fatal accidents resulting from illegal interference with the electricity distribution network recorded during the period.
“We urge the public to refrain from interfering with electricity infrastructure and remain vigilant, reporting any unsafe network conditions,” Babungi says adding that the power distributor continues to sensitise the public on the responsible use of electricity and to the risks through a wide range of channels and engagements and has multiple avenues for the public to report unsafe situations. In addition, he says, “our staff are trained, and continually assessed, on their ability to safely operate and maintain the distribution network.”
Customer Connections
On receipt of connection materials in June 2021 from the Government under the free connections program to connect 87,500 customers out of the backlog of 210,000, UMEME resumed the implementation of the program and have connected 8,907 of the free connections to date.
In addition, UMEME added 31,722 customer funded connections, bringing the total for the period to 40,629.
Bitature says UMEME aims to clear the 87,500 connections by November 2021 as the Government mobilises additional financing for the rest of the backlog.
Currently, the customer base stands at 1,530,733 of which 29,733 are under the post-paid system.
During the last six months, UMEME converted 8,864 of the post-paid customers to Yaka (pre-paid system), with the balance of 20,869 to be converted by the end of the year.
According to Babungi, pre-paid sales contribute 31% of the total revenues and that the rollout of the Online New Applications platform has simplified and improved the customer connections experience.
He says that new applicants under the self-funded program are now connected within an average of 3 days.
“We also connected 98 and 751 industrial and commercial customers respectively,” he added.
Electricity Demand
According to UMEME, overall electricity sales for the six months to 30 June 2021 increased by 11.8% to 1,720 GWh up from 1,538 GWh for the same period in 2020.
“The demand in the first half of 2020 was subdued by effects of the strict lockdown that impacted economic activity,” Bitature says.
He adds: “The growth during the period was driven by increased industrial demand at 13% from new and existing customers, commercial demand at 13% and domestic customers at 5%.”
Energy Losses
According to UMEME, energy losses for the six months were 17.9% compared to 17.5% for 2020. “The Covid-19 restrictions impacted our ability to execute our loss reduction programme during the period. We continue to note with concern the increased tendency of tampering and vandalising electricity infrastructure, including metering installations by some unscrupulous members of the public. With support of the Uganda Police, we have resumed our field operations and any culprits found are prosecuted under the Laws of Uganda,” says Babungi.
Revenue Collections
UMEME says collection of billed electricity revenues is fundamental for the sustainability of the electricity supply industry, growth, and overall service delivery to our customers. The cash flows enable the generation, transmission and distribution companies to meet their operating and investment obligations, without constraining the Government’s fiscal resources.
For the six months to 30 June 2021, UMEME reported a collection rate at 99.1% compared to 93.3% for the same period in 2020. “We extend our appreciation to our customers that have continued to pay their bills on time,” Babungi says.
Capital Investments
Babungi says UMEME is implementing an investment plan of US$ 30 million (Shs 110 billion) related to supply reliability, growing demand, public safety, energy losses reduction and efficiency in operations. Some of the projects under implementation include: Nakasamba power station in Entebbe, conversion of 30,000 post paid customers to Yaka, line refurbishments in Kamuli, Kibimba, Bubulo, Fort-Portal, Kisubi Kampala South; reconfiguration and supply stabilization in Naalya, Najjera, Buwate, Namugongo and Ntinda belt, additional transformer zones and new connections.
Bitature says “as we navigate through the effects of the pandemic, which are evident on the economy and our customers, our focus remains on staff safety, service excellence, and business continuity while minimising the pandemic effects on the Company.”
He notes that the Directors do not recommend payment of an interim dividend.
“The lack of clarity of the Concession post 2025, limits significantly our ability to raise capital and make capital investments in the electricity distribution system to achieve the national electrification goals,” he added.
Bitature says UMEME awaits further engagements with the Government for an amicable settlement of the negotiations.
Once again, he said, “we extend our appreciation to the Government, our business partners, customers, and stakeholders for the continued support to the Company. To the staff, we thank you for your continued commitment to delivering improved and more reliable service, especially during these pandemic times. We remain committed to driving Uganda’s electrification agenda through efficient and safe operation of the electricity distribution system.”