March 24, 2014

Umeme Seeks Help To Cut Electricity Theft

Umeme board chairman Patrick Bitature (L) and managing director Charles Chapman address journalists in Kampala recently.
Umeme board chairman Patrick Bitature (L) and managing director Charles Chapman address journalists in Kampala recently.

Electricity distribution firm, Umeme says it has sought the assistance of the Ugandan government to prescribe stiffer penalties for power theft.

Patrick Bitature – Board Chairman Umeme Limited said the current penalties have not helped in checking commercial thefts of power.

Bitature who was on Monday addressing Umeme shareholders and the press at Kampala Serena as they announced 2013 financials.

“Currently, someone can steal power and go scot-free. The government should come in and help stop this scourge,” Bitature said.

“Illegal power connections are very rampant.

Umeme annually loses $30 million (about Shs78 billion) due to power thefts.

A Umeme staff carries wires from an illegal connection during a disconnection exercise in Ntinda, a Kampala suburb, recently. PHOTO BY YUSUF MUZIRANSA
A Umeme staff carries wires from an illegal connection during a disconnection exercise in Ntinda, a Kampala suburb, recently. PHOTO BY YUSUF MUZIRANSA

Last year Umeme launched an anti-power theft campaign. The effort was meant to reduce power losses – both technical and commercial – by 10 percentage points over the next seven years.

In December 2012, Umeme proposed that fine for domestic consumers who would be accused, prosecuted and convicted of stealing power be increased from Shs295,000 to Shs350,000.

For commercial consumers convicted of stealing electricity, the company proposed that the fine be increased to Shs700,000 from Shs590,000.

Umeme holds a 20-year electricity distribution concession. It is majority-owned by Actis, a London-based private equity investor in emerging markets with around $5 billion in assets under management.

Profits increase

Despite the power theft and other correlated losses, Charles Chapman, managing director of Umeme, said profits after tax grew by 28% to sh84b in 2013 from sh57b in 2012.

There will be a dividend payout of sh16.8 per share to be paid at the end of June. Total dividend payout will be sh24bn.

Chapman also announced that he is confident that the loss target of 14% will be achieved in next 4 years based on research, investment & the new management team.

Umeme entered the industry after the government decided to end a state monopoly in energy and turn it over to private players, who were expected to attract fresh investment and improve its efficiency.

Although the company has promised to rapidly expand the grid, cut losses, reduce power failures and stabilize the cost of power, widespread complaints have persisted about high tariffs, outages and faulty billing.

According to the energy ministry, Uganda has a production capacity of about 550 megawatts, while peak demand reaches about 480 MW.

Umeme’s 2013 postives

  • *No fatalities attributed to network failure
  • *Reduction in distribution tariff through connecting more customers,better connection rates and reduced energy losses.
  • *Improved customer service,with 52,000 customers on
  • pre-payment metering, construction of 3 new sub stations ,
  • e-payment usage.
  • *Increase in investment year on year,connecting more customers and enhancing revenue growth.
  • *Share holder value enhancement through profitability and increased asset base.

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