- The Electricity Regulatory Authority (ERA) has announced that it is currently conducting a thorough cost analysis of the Umeme concession buyout, which includes verifying recoverable investments
- As a listed company on the Uganda Securities Exchange, Umeme is one of Uganda’s largest and most profitable companies
- Energy Permanent Secretary Irene Bateebe estimated that the Umeme buyout as of December 2022 stood at Shs799b (US$215m)
The Electricity Regulatory Authority (ERA) has announced that it is currently conducting a thorough cost analysis of the Umeme concession buyout, which includes verifying recoverable investments. Eng Ziria Tibalwa Waako, the CEO of ERA, stated in a recent interview that the process of investment verification is ongoing and the final buyout amount is expected to be announced in March 2025 after cost and technical audits have been conducted by the Auditor General.
The government had previously indicated that it would allow Umeme’s 20-year concession to expire naturally, with the concession set to end in 2025. As part of this plan, electricity distribution will be transferred to a new government-owned company responsible for Uganda’s power sector.
Additionally, the government is working to boost the capacity of Uganda Electricity Distribution Company Limited (UEDCL), the entity that owns the assets currently under concession with Umeme.
During a recent Parliamentary Committee meeting, Energy Permanent Secretary Irene Bateebe revealed that UEDCL will require a minimum investment of Shs587b (US$158m) in the next three years to improve the distribution system.
She also stated that Umeme is currently investing in certain assets, which are partly recovered through tariffs. While Ms. Bateebe estimated that the Umeme buyout as of December 2022 stood at Shs799b (US$215m), she also mentioned that the government is undertaking an investment cost analysis, which will reveal the final buyout amount.
Umeme, currently the largest power distributor in Uganda, has a customer base of around 1.75 million connections on the national grid. In its latest financial report, Umeme indicated that it would fulfill its mandate of electricity distribution until the very end of the concession before transitioning and handing back the leased assets to the government.
As a listed company on the Uganda Securities Exchange, Umeme is one of Uganda’s largest and most profitable companies.
Umeme Performance
Umeme Limited (UMME) reported a net profit of US$38.9 million (Ushs 148 billion) for the financial year ending December 31, 2022. This represents a 6.47% increase from last year’s net profit of US$36.8 million (Ushs 139 billion), despite negative changes in the macro-economic environment, increased demand for electricity supply following the lifting of Covid-19 restrictions, inflation, increase in interest rates, continued supply chain disruptions, and effects of global geopolitical conflicts.
The electricity sector demonstrated resilience during the year, with an average growth in electricity demand of 9.7% across all customer categories. Umeme Limited operational performance also improved with a 7.4% increase in its customer base and a decrease in energy losses to 16.8% from 17.8% in 2021.
Revenue collection rate increased to 99.7%, resulting in improved efficiency, reduced operating costs per KWh sold and per customer by 7.6% and 5.6%, respectively.
Umeme Limited unfortunately recorded eleven fatalities arising from network interference, power theft and illegal operations by unauthorized people, and urged the public to report any unsafe networks, power theft, vandalism or unauthorized network operations.
The financial performance of Umeme Limited in 2022 showed marginal revenue growth to US$450 million, driven by an increase in electricity demand, reduction in energy losses, new connections, pricing, and revenues from electricity distribution construction services.
However, the gross profit reduced by 1.5% to US$167.7 million due to a reduction in capital expenditure and performance on energy losses. Operating costs increased by 3% to US$65 million, but operating efficiencies improved due to restructuring and insourcing of network operation activities. EBITDA reduced to US$102 million due to gross margin and operating costs.
Finance costs increased, but foreign exchange gains amounted to US$3.7 million. Income tax charge for the year amounted to US$17.7 million. Total assets marginally increased, and shareholder equity increased by 13.1%.
The net operating cash flow for the year was US$92.7 million, and capital investments implemented in the year was US$29.4 million. The Board of Directors recommends a final dividend of US$0.017 (Ushs 63.9) per ordinary share for the year ended December 31, 2022, subject to approval at the Annual General Meeting on May 18, 2023. The dividend will be paid on or about July 20, 2023, to shareholders registered as of June 30, 2023, and is subject to withholding tax.
Recent Umeme Stock Market Performance
Umeme Limited (UMEME) closed its last trading day on Thursday, April 13, 2023, at 400.00 UGX (US$0.11) per share on the Uganda Securities Exchange (USE), recording a 0.2% gain over its previous closing price of 399.31 UGX.
As of April 13, the current share price of UMEME is UGX 400.00. (US$0.11)The stock has been performing exceptionally well, beginning the year with a share price of 275.00 UGX (US$0.074) and since then gaining 45.5% on that price valuation, ranking it first on the USE in terms of year-to-date performance.
Shareholders can be optimistic about UMEME, given that the stock has accrued 33% over the past four-week period alone, the best performance on the USE.
Over the past three months (Jan 9 – Apr 13, 2023), Umeme has been the second most traded stock on the Uganda Securities Exchange. The total volume of UMEM traded during the period is 21.4 million shares valued at UGX 6.85 billion (US$1,835,262), with an average of 340,474 traded shares per session. On March 31st, UMEM achieved a volume high of 5.23 million for the same period. The table below presents the last 10 trading days’ activities of Umeme on the Uganda Securities Exchange.
