KAMPALA – Uganda’s electricity distributor, UMEME earned some profit in 2021 even as the country was placed under covid-19 lockdown as a way to curtail the fast spread of the deadly virus that still bothers the world.
According to the audited financial statement for the year ended December 31, 2021, the company that won a 20-year concession in 2005 to distribute electricity pocketed about Shs642 million gross profit compared to about Shs 479 mln earned in the previous year.
The company in its report attributes the increase in profit to operational efficiencies and underlying distribution margins.
Still, the period under review shows Umeme posted a 13.5 percent rise in revenue to approx. 1.9 bln, from about Shs 1.7 bln realised in 2020.
According to the financial statement, 6067 shareholders will share the net profit of Shs 139 mln at the recommended dividend of Shs 54.1 per ordinary share. Only shareholders captured as of June 24, 2022 will benefit.
The financially powerful NSSF has 23.34 percent shareholding in Umeme, making it the biggest shareholder.
Meanwhile, Umeme says it will continue to engage with the government to have its contract extended beyond 2025, the year it is supposed to end.
“The company will continue to engage with the government of Uganda for clarity on the future of the Concession as the current one comes to an end in 2025,” its Managing Director Selistino Babungi who published the report says of the controversial contract that disadvantages government should it terminate it before 2025.
President Yoweri Museveni has in the recent past castigated the operations of Umeme and even threatened to terminate its contract, even though the company says it has connected about 1.6 mln clients compared to 250,000 connections in 2005.
That aside, energy losses that stand at 18 percent continue to worry both Umeme and Museveni even though Umeme has reduced the rate from 38 percent in 2005.
The agreement stipulates that in case of termination of the contract due to circumstances beyond the control of both parties, the government pays 90 percent of the invested money, which is in the region of about Shs 250 bln. Such circumstances include war, riot, strike, crime, flooding, earthquake, or volcanic eruptions.
The contract also obliges the government to pay an interest of 20 percent per annum of any outstanding portion of the buyout amount should 91 days elapse after the termination date until it clears the money in full.
The Umeme concession was intended to improve the quality of service, increase investment in the rehabilitation and expansion of the power distribution network, reduce losses, increase new connections and provide reliable and affordable electricity to consumers.
According to the government, Umeme has not realised the objectives of the reforms in power distribution, as there is high power distribution losses, billing and collection losses, power tariffs, poor quality services and low access levels.
The company, which distributes 97 percent of grid power, says in its financial report, it has more than doubled network length to 44,000 kilometres, from 16, 000 kilometres in 2005, and that it has increased transformer zones to 14,833, from 6000 in 2005.
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