Shareholders in Umeme limited are set to be richer, after the company announced a solid profit for the year 2013.
The company’s net profits grew by 12 per cent, from Shs 57bn the year before to Shs 87bn. Announcing the results at Kampala Serena hotel, Managing Director Charles Chapman said the profit was driven by a massive reduction in power losses and increased efficiency.
Power losses dropped from 38 per cent five years ago to 23 per cent for 2013. Chapman promised that in the next five years, the company would cut power losses to 14 per cent. Umeme has recommended a dividend payout of Shs 16.8 per share. Umeme’s assets grew by 18 per cent to Shs 889bn last year.
Chapman said the company was still stuck with the old network, a challenge for the business.
“If you went to Kololo, you would see trees falling onto the wires. It is a vast expensive venture to replace that network. It might cost as high as $3bn and it is not sustainable.”
Umeme recently requested the Electricity Regulatory Authority (ERA) to have the power tariff increased, after a slight reduction early this year.
Board Chairman Patrick Bitature compared Umeme to a boy that has grown into a man.
“It [performance] is a source of pride. Umeme listed recently and today the company has proven that he is a man [by posting a high profit]. Listing made us attract low-cost funding and we are making it. I am very confident that Umeme will be the best company every Ugandan would wish to be associated with,” Bitature said.
“We managed to take off the expensive debt and brought in the low-cost debt,” said Bitature, referring to Umeme’s IPO in 2012.
Last year, Umeme invested about $50m in its business and Chapman said that needed to be improved further. The company would continue to prioritise safety of the public. Chapman said they had registered zero fatalities in the last four financial years – no one killed due to a faulty line.
In November, the power distributor secured a $190m loan from the World Bank, which had earlier invested close to $5m in the IPO. Umeme said it would use the borrowed funds to expand and upgrade its distribution infrastructure.
“In the next few years, we plan to invest $440m in the sector,” Chapman said.
Umeme said it would continue to roll out the prepaid meters and have full-scale cover by 2018.
Source : The Observer