UMEME sees Customer base hitting 1 million in 2016

December 30, 2015 in Business, Companies, Energy, Hydro by Editor

KAMPALA, DECEMBER 30

Ugandan electric power distributor Umeme expects to increase its customer base to one million subscribers at the end of 2016 as Uganda races to increase the number of people connected to the grid.

Speaking to 256BN Umeme’s Chief Operating Officer Ms Florence Nsubuga said the firm’s’ customer base stands at about 790,000 today butwas on course to hit the 1 million mark sometime during 2016.

“We are connecting 16,000 new customers a month so 200,000 should be doable next year,” Nsubuga said adding that switching retail customers to the prepaid metering Yaka platform had delivered 1.5 per cent reduction in commercial losses.

The company that is listed on the Kenyan and Ugandan stock markets is at the halfway point of its power distribution concession and now plans to invest between $80-120 million over the next twelve months to connect an additional 200,000 new customers on to its prepaid meter platform which has partly helped to bring commercial losses down to 19.5 Per cent of the energy the distributor received from the Uganda Electricity Transmission Company.

“That 1.5 points reduction translates into an annual saving of $5m and about half of our retail customers are now prepaid so you can imagine the kind of saving that will come as we convert more customers to the prepaid system,” Nsubuga says. Yaka was rolled out in 2013 after two year pilot in two areas of Kampala where the distributor was experiencing high rates of commercial losses.

Increased investment in capacity to get power to consumers comes against a backdrop of increased investment in new generation capacity. Uganda is making huge investments upstream of its electric power subsector amidst concerns over the country’s capacity to absorb the additional output. The subsector has upwards of 850MW of installed capacity, but only 630MW of this is currently being used because of the small number of people connected to the grid (14.8 per cent mid this year), itself largely a result of gaps in the transmission and distribution infrastructure. Another 780MW is expected to gradually come on stream starting 2016 when two major projects Karuma (600MW) and Isimba (183MW) begin to generate.

Umeme says a new 40Mw substation in Namugongo on the eastern flanks of Kampala that will be commissioned before the end of the year, forms part of efforts to improve supply and ready the network for future growth. With a capacity of 40, 0000 retail customers, it is one of three new substations that will be built in the coming months.

“The switching capacity here is equivalent to about 40,000 new domestic consumers but because we have a mix of commercial and domestic users we can safely accommodate 30,000 new connections,” says Umeme Manager for Technical Services Emmanuel Kiremire adding that he expected that capacity manage growth in the load over the next 5-10 years.

“What we are doing now is to improve the quality of supply and also ready the network for an anticipated increase in power supply when two new generation projects – Isimba and Karuma come online starting late 2016,” Emmanuel Kiremire further said.

Retail customers account for 30 percent of UMEME’s revenue. Half of these are currently connected to the pre-paid metering system resulting in significant gains for the distributor’s cash flows.

Activists however fault the government for setting low targets for UMEME, arguing that the distributor is capable of doing better.

“There is under-targeting of outcomes under the energy sector,” says Mr. Julius Mukunda, Coordinator at the Civil Society Budget Advocacy Group CSBAG.

“The sector planned to install 175,000 prepaid metres for the financial year 2015/16 but 155,000 had been installed by the end of the first quarter. With such an exceptional performance of 88 per cent in just three months, it is disappointing that the sector has planned to install only 200,000 prepaid metres during financial year 2016/17,” CSBAG says in its statement on the National Budget framework paper for the 2016/17.