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Transforming Uganda CONTENTS SP027/2018 POWER Transforming Uganda CONTENTS PUBLISHER: The Independent Publications Limited. YEAR: 2018 MANAGING DIRECTOR: Andrew M. Mwenda GENERAL MANAGER: Charles Kankya SALES & MARKETING: Peter Kusiima EDITOR: Haggai Matsiko WRITERS: Julius Businge, Agnes Nantaba, Agather Atuhaire, Flavia Nassaka PHOTOGRAPHY: Silver Ofwono, Jimmy Siya CREATIVE & GRAPHIC DESIGN: Tim Katuramu, Moses Mwesigwa Independent Publications Ltd. P.O. Box 3304 Kampala Uganda Email: [email protected] All rights reserved. No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means) without the prior written permission of the copyright holders. Application for the copyright holder's written permission to reproduce any part of this publication should be addressed to the publisher CONTENTS Umeme has stabilised power supply 1 Umeme is a top grade performer 3 How Umeme has transformed Electricity 4 distribution in East Africa Our ambition is to power Uganda’s 7 prosperity Umeme is an exemplary company in East 12 Africa How Umeme freed up capital for investment 36 into power generation How Umeme has built a competitive work 60 force UMA commends Umeme for power 68 distribution Umeme growing small businesses 96 Umeme powers 2,004 schools 108 Prepaid meters saved Mulago from darkness 110 Umeme facilitates medical research in Uganda 120 NWSC: Umeme critical to water production 124 and supply Umeme is biggest distributor of power to 128 rural communities Creating meaningful impact through CSR 133 investments Umeme plans to invest US$1 billion to meet 140 new power demands Simon D’Ujanga, Minister of State for Energy Umeme has stabilised power supply ew Ugandans may understand “Umeme has improved the the contribution of Umeme to collection rate against billed customers the country’s power sector and Umeme’s and this has further improved with pre- economy as much as Simon significant paid metering,” D’Ujanga notes. “Their D’Ujanga, the Minister of State investment into significant investment in the distribution Ffor Energy. network and maintenance has greatly The electrical engineer currently the distribution improved reliability of supply and other supervises Umeme’s regulator, network and efficiencies.” the Uganda Electricity Regulatory maintenance has The biggest problem in the Authority. Before he served as Deputy electricity sector, D’Ujanga says, had Managing Director of Uganda Electricity greatly improved for a long time been energy losses, Board (UEB), the defunct government- reliability of which were also the biggest cause of owned electrical utility company, from high end user tariffs. 1994 until 1997 and as its Managing supply These losses tend to be technical Director from 1997 until 1998. (power that gets lost in the process of Reforms saw UEB unbundled transmission) and commercial (power into three entities; the Uganda theft). Electricity Generation Company While government retained Umeme inherited losses as high as Limited (UEGCL), the Uganda transmission under UETCL, it handed 38%. 13 years into its concession, it Electricity Transmission Company the concessions for electricity has reduced losses by more than half Limited (UETCL) and the Uganda generation and distribution to to 16.5%. Electricity Distribution Company private companies. Umeme took the Limited (UEDCL). The three entities distribution concession. D’Ujanga attributes all this are in charge of electricity generation, D’Ujanga has confidence in tremendous progress to the transmission, and distribution, Umeme’s efficiency, which he says has investment that Umeme has made into respectively. reduced losses and made power supply the distribution system. reliable. UMEME POWER: Transforming Uganda 1 Eng. Ziria Tibalwa Waako, Chief Executive Officer, Electricity Regulatory Authority 2 UMEME POWER: Transforming Uganda Umeme is a top grade performer he Electricity Regulatory Authority Tibalwa says Umeme has even surpassed (ERA) was established by the 1999 its targets on containing power losses. Electricity Act to license and regulate Umeme found the losses at 35.2% and has operations in the electricity sector. reduced them to 16.5% and is targeting Its mandate includes setting 14.9% at the end of this year. Toperating standards and appropriate end user The only challenge the regulator still has tariffs. This makes ERA Umeme’s immediate with Umeme, is the high cost of financing, supervisor. 80OVERALL PERFORMANCE% which in effect increases the tariff. ERA Chief Executive Officer Eng. Ziria Also the reliability of supply is not yet Tibalwa Waako is happy with Umeme’s work. at the level it should be and the regulator She rates Umeme’s perfomance at 80% and encourages the entity to channel more says that the power distributor has contributed efforts in that direction. significantly to the electricity sector. “Although they have improved the For instance, she says, the entity has reliability and quality of supply,” she says, increased the number of customers connected “They can make it even better. There is still to the grid by more than 200% from 280,000 room for improvement.” to 1.2 million. As of 2018, the growth rate in Tibalwa also says Umeme should help connections stood at 138%. government in accelerating growth and Indeed Umeme's 2017 annual report demand stimulation. indicates that connections increased “Over all,” she says, “Umeme has done monumentally to 8,431. tremendously well and if I were to rate its performance, I would give it 80%.” 17% 200% Drop in power Increase in 138% losses from number of people Growth rate in 35.2% on the grid connections UMEME POWER: Transforming Uganda 3 How Umeme has transformed Electricity distribution in East Africa ince its inception in 2005, Umeme has delivered on majority shareholder owning 23% of the company. This its promise of turning Uganda’s electricity distribution has demonstrated confidence not only in Umeme and the system into one of the best in the region. sector, but the country as a safe investment destination. Uganda’s electricity sector reforms were premised From inception, we have continued to practice world- on attracting the private sector to anchor the class corporate governance standards. We believe in Soverarching need of achieving financial and commercial sustainability of the institution while serving society. To viability of the Electricity Supply Industry. that end, we continue to focus on environmental, social, I am pleased to highlight the positive impact of Umeme to and governance matters at the Board level. customers, the general community, and the entire country. Looking ahead, the challenge and opportunity lies in Over the period, the company has invested over US$ 600 the upcoming electricity generation capacity that will million in the electricity distribution system. increase the installed capacity to over 1,700MW after As a result, this investment has doubled the size of the the commissioning of Isimba and Karuma Hydro Power distribution network, reduced energy losses to 16.5% from Plants (HPPs). Our ambition is to ensure the power is 38%, improved revenue collections, and grown customer delivered safely, reliably and efficiently to the consumers connections to 1.3 million. for economic and social transformation of Uganda. The effective generation capacity has increased from 300 Our strategy is to focus on the industrial hubs and areas MW in 2005 to 930MW as of 2018. The electricity supply to of high economic activity alongside the rural electrification our esteemed customers is more reliable than it was before drive. We will prioritise increasing grid connections for the the sector reforms. businesses and government. The National Development Plan projects electricity access rate of 40% by 2025, Umeme is one of the biggest FDI attractors in Uganda. compared to the current estimated 23%. Our investment The company has mobilised debt financing from among plans are aligned to the priorities of the sector. others, the International Finance Corporation (IFC), Standard Chartered Bank, and Stanbic Bank to a tune of On behalf of the Board, I extend our sincere US$ 265 million. appreciation to the government, stakeholders, business partners, management and staff for the support over the Equally, through listing on the Uganda Securities period to transform the electricity industry in Uganda. Exchange (USE), the ownership of the company has been We pledge our support and dedication to further the broadened to over 5,700 shareholders. NSSF Uganda is the development of the sector. 4 UMEME POWER: Transforming Uganda Patrick Bitature, Chairman Board of Directors, Umeme UMEME POWER: Transforming Uganda 5 Selestino Babungi, Managing Director, Umeme 6 UMEME POWER: Transforming Uganda Our ambition is to power Uganda’s prosperity meme has positively anchored Uganda’s electricity Innovating for Service supply industry that is projected for further growth During the last 13 years, Umeme has innovated and on commissioning of new generation plants. implemented technologies that have delivered a remarkable The success of Umeme is traced to implementation customer experience. of it strategic plans over the period. This has focused We rolled out SCADA (Supervisory Control And Data Uon investment in the electricity distribution infrastructure to Acquisition) and other auto switches for remote monitoring improve on efficiency, reduce energy losses, expand and re- and control of the distribution network. Network automation enforce the distribution infrastructure,
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