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Wednesday,June 19,2019 01:33 AM

Watch out for UMEME

By Paul Busharizi

Added 21st March 2016 04:26 PM

Revenues jumped 18.8 percent to sh1.2trillion from sh980b the previous largely on account of an eight percent increase in units sold during the period.

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Revenues jumped 18.8 percent to sh1.2trillion from sh980b the previous largely on account of an eight percent increase in units sold during the period.

By Paul Busharizi

Power distributor Umeme has just released its 2015 results which show a 10.3 percent increase in net profits to sh105.9b from the previous year’s sh96.0b.

Revenues jumped 18.8 percent to sh1.2trillion from sh980b the previous largely on account of an eight percent increase in units sold during the period.

This is all very nice but what was more impressive about the results is that not only did new additions to the grid jump 142,971 to end the year at 793,544 but that now more than half of consumers are on pre-paid meters.

This is important because one of the factors that has dogged Umeme’s history is the issue of power losses.

So far energy losses have continued their downward trajectory with the company reporting losses of 19.5 percent down from 21.3 percent. Five years ago energy losses were reported to be 30 percent.

There are two types of power losses, the technical ones which are a function of losses due to inefficiencies in the grid and the commercial losses which occur due to failure to collect what is due or theft.

By reducing commercial losses the company can then focus more of its effort in reducing technical losses through increased investment on the network to improve its efficiency.

One can expect Umeme will not let up on its investment on pre-paid meters in light of the latest results.

Shareholders will be gratified by the more than 50 percent jump in earning per share which one can expect will be reflected in share performance in coming months.

As an example of a privatisation in which government partnered with credible partners, with not only the track record but the financial muscle to execute, few beat Umeme.

The challenge though in coming months is whether the power generation capacity can cope up with Umeme’s ability to bring more demand to the network, which one can only expect will be speeded up in coming months and years.

As it is now power outages are beginning to creep back albeit for minutes rather than for hours.

While installed capacity is reported at over 800 megawatts peak generation stands at 550 megawatts while peak demand is fast catching up and stands at just under 500 megawatts.

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