By Silvia Nyambura
Power utility company Umeme recorded a sluggish demand for electricity at 4.4% in 2016 compared to 8% in 2015. It also registered a drop in profits from Ushs 106 billion to Ushs 100 billion in the period under review. This was attributed to the uncertainty that came with the 2016 presidential elections and the high commercial rates.
Speaking at the company’s Annual General Meeting (AGM) last week, Umeme Managing Director Selestino Babungi said, “The manufacturing sector which is made up of heavy consumers of electricity grew by less than 1% hence the slowdown in industrial activity. This is because we had elections. So, major industrial players withheld their capital investments or production schedules. In addition, we recognize the impact of global economic and political trends on the country macro-economics, especially the regional economic effects from the war in South Sudan.”
He explained that in 2016, the economy only grew by 4.8% below the initial target of 5.5%, with the manufacturing sector registering no growth. Inflation closed at 5.7% while the shilling depreciated by 6.9% against the US dollar.
Babungi disclosed that in 2017, the company would focus on more capital investments of US$ 100 million, regulatory targets of 16% for losses, 98% for collections, cost efficiency, prepayment rollout, access to the grid, customer service and talent development.
“Right now up to 65% of our customers are on prepayment metering as of 31st December 2016. Our target is to convert all post-paid customers to prepayment by 2018. This metering system is one of the mechanisms the company is using to protect the shareholder value as it minimizes power thefts and eliminates costs associated with meter reading, bill printing, bill delivery, disconnections and reconnections. Feedback from our customers on prepayment is that they like it most. More and more customers want to be converted to prepayment immediately,” he added.
Patrick Bitature, the Umeme Board Chairman, said the company’s ultimate goal is to give shareholders a good return on their investment.
“We invest more each year so that there is more return on shareholder investment the following year. That is the most important issue for the board,” he said.
Umeme declared a final dividend of Ushs 17.8 billion with each share going for Ushs 7.8.
Nyambura is a senior journalist based in Kampala