“To-date, we have invested more than US$100million, and we plan to invest at least US$32million more in 2011. These investments are into assets owned by the government of Uganda through the Uganda Electricity Distribution Company (UEDCL),” Umeme Managing Director Charles Chapman said.
The investments include a comprehensive systems improvement programme and a pilot prepaid metering project in the process of being introduced to over 10,000 customers in Kitintale Area covering Mbuya, Bugolobi, Mutungo, Luzira, Bina and Kinawataka, in Kampala East, at a cost of US$3.4million. Umeme said arrangements were being made to establish vending outlets at the Kitintale office and as the project progresses, other vending outlets like supermarkets and petrol stations will be established.
“These investments have already began to pay off, and Umeme is now connecting more people than ever before. From the start of the concession, Umeme was given a target of connecting 60,000 new customers in the first five years. Today, we have exceeded that target by connecting over 172,000 new customers,” Chapman added.
The Umeme scorecard also indicates a decrease in the time taken to process new connection requests, from 35 days to an average of seven (7) days from the time a customer makes payment for a new connection.
On revenue collections, Umeme scored highly, with 95% of all bills being paid by the end of 2009, as opposed to 75% in 2005 when Umeme took over from the Uganda Electricity Board. The target set by the government of Uganda for Umeme by end-2009 was 92% of bill collections.
The Scorecard report explains that the rapid growth in the demand for electricity is being met by an expensive reliance on diesel generation, which is aided by government subsidies to maintain stable end-user tariffs.
“We recognise the government of Uganda’s efforts to increase hydro and renewable generation capacity in the short and long term. This will relieve and remove the reliance on the more expensive thermal generation,” Chapman said.
On rural electrification, Umeme has implemented 100 rural electrification schemes worth over US$6.5million, and is working hand in hand with the Rural Electrification Agency to extend power in 46 rural areas, at a cost of a further US$4million.
On the 2011 tariff, Umeme revealed plans to invest another US$32million into the network in 2011. Umeme has applied for a distribution tariff of Ushs190.76 for 2011.
The distribution tariff will fund the 2011 priority investment projects like; prepaid metering, loss reduction projects, safety related projects including the Aerial Bundled Conductors, customer service improvement and debt-servicing.
“It is anticipated that Government subsidies will continue to be availed and applied against the power supply price in order to maintain the end user tariff for domestic consumers at Ushs385.6,” Chapman said.
The electricity tariff is driven mainly by the cost of power generation, including fuel, transport and transmission costs, non-Umeme technical losses and exchange rate variations. Only 28% of the price of electricity is related to Umeme.
“While power supply costs and price have increased significantly over the past five years due to the high cost of generation, Umeme’s contribution to the tariff has decreased by 50% over the past five years. In January 2010 retail electricity tariffs were reduced by an average of 6% for all customer categories and by 9.9% for domestic consumers. Before this, mind you, the end user tariff had not increased since November 2006,” Chapman said.
He explained, however, that losses needed to be controlled further to stop the price of electricity from rising.
“We have worked well with communities to reduce losses, and can report tremendous success. Losses have reduced from well over 38% when Umeme started operations in 2005, to an average of 30% for the current year – split between commercial losses at 17% and technical losses at 13%. Next year we should report a drop in losses to at least 28%,” he said.
“Through all of this, safety has been at the forefront, being a core value for our business. US$25million of our investments annually has been to ensure that the network is safe for our staff, customers and the general public. We continue to conduct safety campaigns and sensitisation programmes so that people are aware about the dangers posed by electricity and illegal connections,” Chapman added.
Umeme declared that as part of the safety programmes, over 120,000 rotten poles have been replaced countrywide, sub-stations have been fenced and, in some areas, traditional overhead conductors are being replaced by aerial bundle conductors, which are much safer.