Umeme to cut power losses to 23%

By Samuel Sanya

Energy utility Umeme is rolling out a new insulated power cable to improve safety and cut energy theft and power losses to about 23% this year.

The naked electricity wires are being phased out to make it harder for illegal connections. The changes will also help increase company profits. Technical and commercial power losses are currently at 27.3%, down from 38% in the year 2005.

“We have already introduced the insulated cables in Entebbe, Nateete and Abaita ababiri. The ABC conductors have reduced energy losses to 21%, from 35% in these areas,” said Selestino Babungi, the Umeme chief financial officer.

The firm is rolling out prepaid electricity, electronic billing, Short Message Service (sms) platforms and the touch pay mobile money payment service.

Umeme made sh57b after tax profits in 2012 and shareholders will get sh15 in dividends per share.

So far, 513,000 users are connected to the electricity grid, 55,000 more than the start of 2012. About 300 new connections are made each day after the process was decentralised.

It now takes seven days to get an electricity connection, down from 14 days in 2010.

New connections in 2014 will be made on the prepaid system. Umeme is refurbishing two substations at Waligo in Mutundwe and Lubowa to connect 20,000 new consumers in the surrounding areas.

The utility firm has acquired a SCADA system that enables it monitor electricity usage from a central location, improving operational efficiency.

Babungi said the 250Mw Bujjagali power dam has decreased the incidence of power black outs, improving revenues. He, however, added that power blackouts may resume in the next 12 months if no additional supply reaches the market.

“Power demand is growing rapidly at 10% annually. We need about 50Mw to be added on the national grid every year until the 600Mw Karuma power dam comes online,” he noted.

Electricity tariffs went up by 36% in 2012 after government subsidies were removed. The Government spent over sh1b on thermal power subsidies between 2005 and 2011.

Though the changes squeezed consumers, past payment woes with thermal generators have been put to bed.

Electricity players have asked for harsher punishment for vandalism of infrastructure. The maximum fine for vandalism of electricity infrastructure in Uganda is sh1m compared to Kenya’s sh30m.

Umeme is mobilising loans worth $350m (sh903b) for capital investments. The money will finance network refurbishment, network extension and fund the prepaid electricity roll out.

“Our recent IPO (initial public offer) brought new investors to the Ugandan economy. Some of these investors are looking to invest in power generation,” Babungi said.