Energy losses remain a big challenge to Umeme
Uganda’s leading power distributor, Umeme Limited has registered a net profit of Ushs139.15bn in 2021, up from Ushs43.08bn in 2020.
According to the company’s audited financial statements for the year ended 31 December 2021 released today, “The main drivers of the financial performance were capital investments in the grid that anchored growth in sales and improved efficiency in distribution operation.”
According to the results, revenue increased by 13.5% to Ushs 1,885 billion in 2021 compared to Ushs 1,661 billion in 2020, driven by increased electricity sales and revenues from provision of electricity distribution construction services.
Operating costs increased by 6.3% to Ushs 239,887 million in 2021, on account of global conditions that resulted in inflationary pressures on key inputs, increased business operations in service delivery and network repair and maintenance costs.
Earnings Before Interest Tax Depreciation and Amortization (EBITDA) for the year increased to Ushs 402,345 million compared to Ushs 245,686 million; driven by the performance on gross margin and operating costs.
The Earnings per Share (EPS) increased to Ushs 85.7 from Ushs 26.5 for 2020.
Umeme’s outstanding interest-bearing debt reduced to Ushs 336,605 million in 2021 from Ushs 517,104 million in 2020 following debt repayments of Ushs 170,934 million during the year (2020: Ushs 110,052 million).
The results show that Umeme connected 129,511 customers to the grid in 2021 compared to 57,000 in 2020. “The increased connections were delivered through customer selffunding and the free connections program of the Government of Uganda. Of the additional customers, 1,410 were in the commercial and medium industry categories and 45 were large industries. The customer base increased by 9% to 1.6 million of which 99% comprise domestic customers that are on prepayment metering systems,” Umeme says.
The Company says the financial results reflect its 2021 recovery strategy from the Covid-19 effects anchored on the delivery of the Concession mandate of investing in distribution grid expansion, network operation and maintenance, improving electricity distribution efficiency and reliability, customer grid connections and provision of technical and advisory services.
Electricity Demand
The results show that electricity sales increased by 10% to 3,507 GWh from 3,201 GWh of 2020.
“This increase is higher than the 6% registered during the preCovid years. The growth in 2021 was driven by increased industrial demand at 11.5% from new and existing customers, 9% from medium and commercial customers , and 6.5 % from domestic customers. There was increased consumption of power by existing and new customers during the year due to improved distribution system stability because of continued capital investments and improved economic environment following the lifting of restrictions,” Umememe said in a statement.
Energy Losses
The energy losses for the year stagnated at mid-year levels of 18.0% compared to 17.5% in 2020 and 16.4% in 2019, the last full year before the impact and effects of Covid-19 pandemic.
“The Covid-19 restrictions on movements as directed by the Government impacted our ability to execute our loss reduction plan,” Umeme said, adding:
“We believe stronger penalties, as proposed in the Electricity Amendment Act shall act as a deterrent against vandalism of network infrastructure and illegal electricity usage. We have rolled out a revised strategy to reduce energy losses to sustainable levels.”
Revenue Collections
For the year ended 31 December 2021, Umeme’s revenue collection rate was 99.1%. Pre-paid sales contributed 30% of revenues.
Capital Investments
Umeme says it delivered its annual investment programme of Ushs 122.5 billion (US$ 34.1 million), completing projects aimed at improving supply reliability, growing demand, public safety, reduction of energy losses and improving efficiency in operations. Some of the projects implemented include: Nakasamba power station in Entebbe, conversion of 28,000 post-paid customers to the Yaka prepaid system, line refurbishments in Fort Portal and Kisubi Kampala South, reconfiguration and supply stabilisation in Nalya, Najjera, Buwate, Namugongo and the Ntinda belt, additional transformer zones and customer new connections.
Proposed Dividends
Subject to the approval of the shareholders, Umeme said, the directors have recommended to members that a final dividend of Ushs 54.1 per ordinary share be paid for the year ended 31 December 2021 (2020: Ushs 12.2), subject to deduction of withholding tax where applicable, to shareholders registered in the books of the Company at close of business 24th June 2022.
“If approved, the outstanding dividend will be paid on or about 22 July 2022,” Umeme said.
