Umeme profits fall by 64% in first six months of 2020

Kampala, Uganda |  THE INDEPENDENT | Power distributor Umeme saw its after-tax-profits fall by 64 per cent with the revenues affected by low demand for electricity and payments during the coronavirus lockdown.

Umeme said in its half-year financials published today that the company’s profits had dropped to 22 billion Shillings in the six months to June 2020 from 61 billion Shillings earned in the same period in 2019.

As business and economic activities shutdown on government restrictions between March and June 2020, power demand also dropped. The demand, Umeme says fell to as low as 29 per cent in April when the government instituted a full lockdown, while energy losses increased to 17.4 per cent compared to 16.9 per cent for the same period in 2019. 

“Our field loss reduction activities had to be drastically scaled back during the lockdown period where we recorded a spike in commercial losses,” Umeme says in a notice on Monday. 

Electricity sales reduced too. This translated into a direct loss of 13 billion Shillings as of June 2020. Umeme Managing Director Selestino Babungi had said earlier that such activities as entertainment, hotel services also consumed power yet many have been closed. Also, smaller SMEs that used power in their operations remained closed for at least 80 days affecting sales.

For some people and agencies, despite continued use of electricity, they didn’t pay their dues especially those still on post-paid arrangements. 

President Yoweri Museveni ordered Umeme not to disconnect anyone because of payment.  The easing of restrictions has seen a recovery in demand for electricity with the daily average sales improving to 93 per cent, the same as the pre-COVID-19 daily average.

Meanwhile, the company said it had customers connected to the grid increased by 4 per cent to 1.52 million. This is after it connected 54,779 customers in the six months to June 2020, financed by the government under the electricity connection policy.

The Electricity Connections Policy-ECP, which allowed Ugandans to be connected to electricity for free if they are near a pole, was suspended last month until further notice after Umeme said the government had not paid for some of the previous connections.    

The fall of profits will the money paid to shareholders of Umeme in form of dividends fall too. The company says it will pay 13.4 Shillings per share for the reporting period down from 37.7 Shillings per share it paid last year.

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URN