Umeme’s profits drop by 64% in 2020

Uganda’s power distributor Umeme incurred direct revenue losses of 13 billion shillings in the first half of 2020 due to a decline in electricity sales.

According to The Independent, Umeme saw its after-tax-profits fall by 64% as the demand for electricity continues to reduce during the Covid-19 pandemic.

Releasing its half-year financial results, the electricity distributor said that its profits have dropped to USH 22 billion in the first six months of 2020. According to the company’s managing director Selestino Babungi, the demand for electricity has fell by 29% during the half-year period. The company also experienced an increase in energy losses from 16.9% to 17.4% between 2019 and 2020.

The reduction in electricity demand can be associated with reduced consumption as customers try to cut down on costs during Covid-19 period. According to Babungi, the demand for electricity has fallen as SMEs remain closed and the hospitality industry continues to scale down its operations.

Some consumers also continue consuming electricity without paying even as the country struggles to keep the economy afloat during the pandemic. President Yuweri Museveni has earlier ordered Umeme to keep everyone connected even if they failed to pay.

Although the number of customers has increased by 4% within the past year following the government’s electricity connection policy, demand is still low as existing consumers reduce their consumption of the coveted energy.

The fall in Umeme’s profits means that the company’s shareholders will lose capital and dividends on their shares. Umeme has announced that it will pay dividends of USH 13.4 per share this year, which is a drop from SH 37.7 per share last year.

Umeme is listed in Uganda Securities Exchange and cross-listed in Nairobi Stock Exchange. In Uganda, the company’s current share price was USH 244.265 on Monday. In Kenya, the company was one of the top gainers on Tuesday with a share price of KSH 7.50, increasing from a previous price of KSH 6.90. This is a good performance compared to its peers in Kenya, Kenya Power and KenGen, which recorded KSH 1.89 and KSH 5.40 per share respectively.

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