By KT Reporter
Umeme Limited on Monday finally relinquished assets and the control of electricity distribution in the country.
The electricity distribution was reverted to Uganda Electricity Distribution Company Limited (UECDL) under the concession that has been running from 1st March 2005 and elapsed at midnight of 31st March 2005.
The handover of what has been described as big switch was witnessed by the Energy and Mineral Development Minister, Ruth Nankabirwa, State Minister for Energy, Sidronius Okaasai Opolot, other technocrats at the Minister and the Electricity Regulatory Authority led by Engineer, Ziria Tibalwa Waako. Some of the speeches at the handover even sounded like obituaries told at the demise of a prominent elder in a home or an emerging leader.
To many, Umeme Limited will have an indelible mark on Uganda’s electricity distribution network despite recent public outcry about the buyout amount claimed as the 20-year concession came to the end.
Selestino Babungi, who has been the Managing Director at Umeme for over a decade in trying to sum what the company has done in the last twenty years, said the company was in 2005 given a very small switch. “Now we are giving back a very massive big switch“he said.
As Umeme exists, Babunji said they have tried to address most of the challenges that existed before it was awarded the 20-year concession.
These, he said included few connectivity, challenge in terms of efficiency, few connectivity of people to electricity and limited technical capacity the electrical supply industry among others.
“And the whole sector was deemed not commercially viable. That led to the past reforms made twenty years ago,” he said.
What has Umeme Left Behind?
Babunji when Umeme was handed concession, the government was seeking for the private sector to invest in power distribution network. He said cumulatively, over USD 850 Million was invested in the sector until end of the concession.
“The network has more than doubled, you handed over 5000 transformer zones, we are giving back 170000 zones, 34000 kilometers of lines, you gave me a quarter a million customers, I’m giving you nine times that.2.2 million customers” Babunji reported.
He also highlighted energy loss reduction by Umeme as the key millstones. “We may take it lightly but this eats into the financial viability of the sector. In the past we had 35% energy losses, we are handing over 16%” he stated.
In financial terms, Babunji said the distribution network was in 2005 generating 160 billion shillings and that the sector is currently generating 2.5 trillion shillings.
“‘It is a $700 million revenue business growing at an average of 10%. That is what we are handing over and we believe that should be protected because it can attract investments upstream, downstream and in generation he suggested.
He further stated that Umeme is handing over a growing sector. “What is very important is that we see some sectors grow in the negative. We are selling five times volume power compared to the previous time when we started” he revealed.
Is the network falling apart?
There have been suggestions that Umeme is exiting the market when the network is falling apart. Some have suggested that the disruptions or power outages because of asset stripped. Babunji denied that the network is falling apart but it is carrying 70% more power than five years ago.
“We are loading the network with a lot of power without opening the arteries to carry that power. That is the challenge we are facing” he explained.
Babunj said Umeme has in the last twenty years built a foundation in the power distribution in which the next operator should build on.
“My biggest challenge is the rate at which power is being demanded. If we don’t do anything in the next three years, we will run out of power”
Umeme Limited Board Chairperson, Patrick Bitature said there is still a bit of work to do in terms of negotiating the buyout amount as the concession ends.
“Some people fee that the negotiations have got to continue. Yes they have are going to continue. And I need to assure my shareholders. That buy out amount is not what they expected. But that s for another day,” he said.
The government paid Umeme Limited $120 million last week but Umeme claims it is owed $234m. Umeme has a contractual obligation to support Uganda Electricity Distribution Company Limited during the next six months.
Change of guard Umeme Staff change uniform
Come Thursday 1st April, power consumers are likely to see most of the former employees of Umeme back into their offices save the color of uniforms.
Uganda Electricity Distribution Company Limited Managing Director, Paul Mwesigwa said all the jobs outlined in the new structure as approved by the ministry of Energy have been filled by former Umeme employees.
“We believe we have the best team to take on the mantle and the exercise” he said. He revealed that two thousand seven hundred and ten former employees of Umeme Limited have been absorbed in by UECDL.
“We are still remaining with eleven positions that we are trying to manage. But we believe that by the end of business today, we shall be in position to conclude that from the team” said Mwesigwa whose company has just received $74 million to carry on the new mandate.
He said all the assets of Umeme have been audited and registered in UECDL’s accounts-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
