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Umeme Connects 1Million Customers to National Grid; Gov’t “Desirous” to Extend Contract

Power supplying company Umeme has now connected up to 1million new customers to the power grid since commencing operations in Uganda.

The utility company, which is ranked among the topmost in Africa, currently boasts of 1.3million customers in the country.

This customer base according to Umeme Managing Director Mr Selestino Babungi, has grown from a measly 290,000 customers which the company inherited from Uganda Electricity Distribution Company Ltd (UEDCL) in 2005.

Umeme on Monday released its financial results for the year 2018, indicating tremendous growth in its customer base, demand, collections and profit.

“We have increased our customer base by 15%,” Mr Babungi told press in Kampala.

“Now Umeme has 1.3 million customers over the last 13 years. From when we took over, we have added to the grid 1 million customers.”

Babungi says the company expects an even faster growth of the customer base now that government has come out to cut connection costs.

Under the Electricity Connection Policy which was launched last year, households and businesses located sixty metres from an electricity pole qualify for free connections as long as their houses are wired by certified electricians.

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The Policy is hoped to increase Uganda’s power connection from 20% to about 80% as desired in the Vision 2040.

Umeme also announced it collected 102% of the bills generated from 2018, which according to Mr Babungi is mostly due to the big number of connections on the prepaid metering system.

“We have over 1milion customers on prepaid metering. That means we have a smaller sample of customers on post-paid that we have to deal with,” he said.

Meanwhile, Umeme last year saw a 9% increase in power demand.

The company, Babungi says sold 3011 Gigawatt hours of power compared to 2760gwh in 2017.

“The most important message here is that we are seeing high growth in the industrial category. Industrial demand grew at 12 %, and for that we commend government for encouraging industries into the country,” he said.

Contract

At the press conference, the Umeme MD revealed that government is eager to extend the company’s concession, which expires in 2025.

“The company and the government are desirous to explore the area of extending the concession to enable attraction of long term capital,” he said.

Government, according to Babungi now understands the need for Umeme to secure capital to make longer term investments in power distribution, considering government’s heavy investment in power supply.

The government, he said, also understands that this investment in distribution cannot be made without certainty on the future of the company.

“Considering the significant investments happening in generation, the expansion of the transmission grid, and government desire to electrify everybody cross the country, it’s important that we the distributor build the backbone that will take the power from transmission to the end user. And to make those investments you need capital. But If you go to the market with 5 years of your contract remaining; you can raise money but put a lot of pressure on the consumer, because you are amortising 15 – 20-year money in just 5 years which may drive up the traffic,” he said.

“So we told government that it is both in its interest and and the public that since we have delivered on our mandate, the concession can be discussed and extended.”

President Yoweri Museveni, who recently directed commencement of negotiations to the extension of Umeme’s contract, had earlier in 2018 raised concerns about power tariffs, threatening to cancel the concession.

Among other issues raised by the president was Umeme’s power losses which he said were contributing to the high power costs.

According to the financial results released today however, the company managed to reduce power losses from 17.2% in 2017 to 16.6%.

This means that Uganda now has the lowest power losses in the East African Region.

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