kampala. Power utility company, Umeme, has reported an 18.8 per cent fall in net profit to Shs70.4b at the end of 2014 due to foreign exchange losses. Financial results released on Tuesday indicate the company grew its revenues to Shs977b from Shs965b in 2013, but the weaker Shilling took a significant amount of it away.
“The decrease in profits is attributed to the higher foreign exchange losses,” the Umeme statement reads in part.
According to the statement, Umeme suffered a Shs28.9b loss due to the depreciation of the Shilling. In January 2014, the Shilling was trading at an average of Shs2,500 against the dollar. By the time the year came to an end in 2014, it had closed in on Shs2,800.
In 2013, Umeme did not incur such a loss as the Shilling was stable against the dollar.
In 2014, the Electricity Regulatory Authority (ERA) estimates that the depreciation of the Shilling alone increased costs in the power sector by almost Shs86b.
“It is important to note that the Shilling depreciated at an unprecedented rate of 10.1 between November 2013 and November 2014. As a result, overall power sector costs rose,” a statement from ERA reads in part.
By press time, Umeme was yet to explain how the foreign exchange loss was incurred. However, UETCL has previously hinted that the power bought from generators such as Eskom and Bujagali, is in done in dollars. When Umeme is selling to customers, it does so in Uganda Shilling, which explains the foreign exchange loss.
loss and dividends
The company also announced it had reduced energy related losses from 24. per cent in 2013 to 21.3 per cent in 2014.
SOURCE: Daily Monitor