UMEME Spends Over UGX8 Billion On Hiring New Staff As Their Contract Nears Expiry
Umeme Ltd has spent Ush8.13 billion ($2.19 million) to hire 737 additional staff a 47 per cent increase to help grow its customer base by one million connections this year, ahead of the termination of a 20-year electricity distribution concession with the Uganda government that ends on March 30, 2025.
The firm, which is listed on the Uganda Securities Exchange (USE) and cross-listed on the Nairobi Securities Exchange, disclosed that discussions are underway with the government to roll out a World Bank-funded Scale-up Connections project in the second half of this year.
“The programme intends to add a million connections to the grid. The additional connections require re-enforcement investments in the capacity of the backbone distribution infrastructure,” UMEME said in its latest 2022 annual report.
Umeme, which is the majority (23.34 per cent) owned by the National Social Security Fund, increased its total number of electricity consumers by seven per cent to 1.75 million in 2022 from 1.63 million in 2021.
The total number of employees increased by 47 per cent to 2,301 from 1,564 pushing staff cost (excluding contract management fees paid to contractors that are involved in the repair and maintenance of the distribution network) to Ush110.95 billion ($29.98 million) from Ush102.81 billion ($27.78 million). The firm attributed the increase in staff numbers (who included contractors, technicians and graduate trainees) to the re-organisation of the business to improve customer experience.
Umeme’s 20-year electricity distribution concession that took effect on March 1, 2005, entailed taking over the distribution and supply of electricity in Uganda from the Uganda Electricity Distribution Company Ltd.
The Ugandan government has advised the company of its intention to let the concession run to its natural end, with the distribution assets and mandate reverting to the government after the settlement of the contractually specified buyout amount.
The state intends to rollout the second generation of reforms that include consolidating the varying electricity segments into one national utility, with minimal private sector participation.
In Kenya, utility firm Kenya Power issued a profit warning to investors that its net earnings for the year ended June 2023 will fall by at least 25 percent on the adverse impact of volatility in the forex market and the 15 percent cut on electricity retail prices that lasted from January to December 2022.
The firm posted a net loss of Ksh1.14 billion ($8.03 million) in the six months to December 31, 2022, from a net profit of Ksh3.81 billion ($26.85 million) in the same period the previous year.
Kenya Power lost Ksh37.65 billion ($265.42 million) on the acquisition of expensive power during the 12 months to June 30, 2022, as discussions on whether to terminate long-term power purchase agreements with independent power producers falter.
It also secured a one-year debt repayment period extension for Ksh25.12 billion ($177.09 million) owed to the government to help restructure its commercial debts and ease its deteriorating cashflow position.
The firm which is 50.08 percent owned by the state disclosed through its annual report (2022) that it obtained an extension of on-lent debt repayment moratorium approved by the National Treasury amounting to Ksh25.12 billion ($177.09 million) to June 30, 2024.
The debt was due for repayment on June 30, 2023.
Another Ksh5.7 billion ($40.18 million) debt moratorium granted by the National Treasury in 2020 expired in June last year (2022) with full repayment (principal and interest) expected to start in July 2022).
Kenya Power remained in a negative position of Ksh55.74 billion ($392.95 million) as at June 30, 2022.
