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    Umeme's U.S.$765 Million Boosts Energy Sector


    June 2, 2022 - Aaron Gad Orena

     

      Power distributor Umeme's $765 million cumulative investments in the electricity sector have yielded positive results relating to reliability of the network but also servicing a growing number of customers, the company has said.

      Speaking during the 10th Annual General Meeting in Kampala, Umeme board chairperson Patrick Bitature said Umeme remained at the forefront of supporting Uganda's electricity development through investments of private capital to improve electricity distribution, while anchoring further investments in the economy.

      "Since the 2012 Initial Public Offer, Umeme has invested $636 million; $765 million in total since its inception. This money has all been invested in a distribution system, leading to a fourfold increase in the customer base to 1.6 million customers," Bitature said.

      He added: "We have doubled our electricity sales to 3,500 gigawatt hours, reduced energy losses from 27.3 per cent in 2011 to 18 per cent today, maintained our collection rates at 99 per cent and rolled out prepaid metering to 99 per cent of the 1.6 million domestic customers and invested in innovative technologies and digital solutions for service and business operations."

      Uganda's installed generation capacity as of 2021 was 1,346MW compared to 380MW at the start of the concession in 2005. Umeme managing director Selestino Babungi said the company had ramped up investments in 2021 to create demand for electricity.

      He said the company is now focusing on creating electricity demand through industrial production, productive use of electricity and new customer connections. Babungi said the demand for electricity continues to grow year-on-year, with a 10 per cent increase in sales in 2021 to 3,507GWh.

      "The growth is driven by investments in grid expansion, connections, reduction in energy losses and increased generation capacity. Growing sales reduces deemed energy costs and contributes to overall tariff reduction," he said.

      Babungi said they connected 129,000 customers to the grid in 2021, funded under the capital investment, self-funding, and government free connections. He said the company has simplified the connection process through the online application platform.

      However, the new connections are still a challenge due to lack of government-funded connections, with a backlog of 211,000 pending. The company also converted 99 per cent of customers to prepayment metering, which has improved revenue collections.

      INVESTMENTS

      Through investments in the distribution grid and streamlining the commercial operations of the business, Umeme has reduced energy losses from 38 per cent in 2005 to 18 per cent by 2021.

      "Over the last two years, the effects of Covid-19 combined with the lack of ECP funding have contributed to the loss reduction performance. With the opening of the economy, we have re-invigorated our strategy to reverse the curve," Babungi explained.

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