This archive report was first published on 28 August 2021.
On August 28, 2021, Umeme Ltd reported a significant boost in its earnings during the first six months of 2021, despite the challenges posed by the Covid-19 pandemic.
The power distributor's total sales revenues rose from Ush848.8 billion ($238.9 million) in June 2020 to Ush827.9 billion ($233 million) in June 2021, while net profit before tax increased from Ush32.2 billion ($9 million) to Ush69.6 billion ($19.6 million) during the same period.
Umeme's earnings were further boosted by the partial repayment of a $16 million debt incurred by the government under the Electricity Connections Policy (ECP). The ECP has led to the implementation of over 200,000 new electricity connections in various districts since its launch in November 2018.
However, the power distributor's share price at the Uganda Securities Exchange dropped to a record low of Ush189 ($0.05) mid-month, following the exit of some foreign investors reportedly frustrated by delayed government clarity over the future of Umeme's 20-year concession contract.
Despite this, Umeme's earnings were also driven by the growth of local industries, which have invested in domestic production of certain inputs traditionally imported from Asia. This shift has led to higher electricity consumption rates, increased productivity, and reduced import orders.
According to Dr. Martin Kyeyune, a senior executive at Roofings Group, 'Import substitution is the way to go in this economy. But it is difficult to forecast industrial sector growth in the short term because of unpredictable Covid-19 lockdown patterns.'
