UMEME commits to invest more despite a triple slump in profits last year

UMEME service man on duty; The power distributor reported a triple slump in profits in 2020; Courtesy Photo

UMEME, Uganda’s electricity distributor reported that it is considering continued investment despite a triple reduction in profits registered in the year 2020.

According to the company’s financial performance and operational results’ report released today, UMEME registered a gross profit of 479BN in 2020, with a net profit of 43BN, compared to a net profit of 139BN accrued in 2019.

The report for the year ending 31 December 2020, shows that UMEME’s revenue collections for 2020, dropped by about 1 Trillion (7%) down from 1.77 Trillion (2019) to 1.66 Trillion.

According to UMEME Board chairman Patrick Bitature, the the slump in profits is attributed to the effects of the COVID-19 pandemic and lags in regulatory income recoveries which impacted the overall operational and financial performance.

“The year has been challenging, disrupted by the Covid-19 pandemic that has negatively impacted our business, our
customers, the Country and the world at large. Electricity demand dropped; safety risks to our staff increased; supply chains were disrupted; the way of doing business drastically changed and the general economic outlook remains uncertain” Bitature said.

The demand for electricity in high margin commercial and industrial customers reduced by 9% in 2020, the report shows.

Despite the profit slump, UMEME says it is considering continued investment towards scaling up the distribution capacity in order to provide stable and quality power supply to their existing and future customers. This, UMEME says, is possible due to the increasing generation capacity and build-up of the transmission back bone.

“The pandemic has challenged us to rethink our business models to protect and enhance delivery of value to our stakeholders. In the coming year, we are re-organizing the business, taking advantage of investments in technology, and
directing resources to high value driving levers” Bitature adds.

UMEME’s mandate involves, operation, maintenance and upgrade of electricity distribution infrastructure, electricity retail and provision of related services to customers. The company distributes 97% of electricity in Uganda, serving 1.5 million customers including domestic households, commercial small and medium enterprises, and industrial customers.

In the period under review, the report also shows that 59,623 new customers were connected on the power grid in 2020 bringing the cumulative percentage of UMEME customers on prepaid metering to 97%.

The new connections, according to UMEME, were lower than the projected numbers, a trend attributed to limited government funding for the free connections programme under Electricity Connections Policy (ECP). This, UMEME says, led to a backlog of 210,000 applications as of December 2020.

However, UMEME claims it achieved an improved customer satisfaction index of 72.5% in 2020 compared to 71% the previous year.

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