President Yoweri Museveni labor
day remarks over electricity distribution costs seems to have sent shock waves
among shareholders of Umeme Limited-the main electricity distribution company.
The concern over the President’s statement emerged
on Thursday as Umeme shareholders met for the annual general meeting in
Umeme Board Chairperson,
Patrick Bitature while addressing the shareholders said the President’s remarks
are already impacting the company negatively.
Bitature says for example, the company’s shares lost
their prices by half when the president first demanded to know about the
concession, and that since then, the price has never recovered.
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The President in said the
government could bypass the Umeme system when supplying to industrial
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The President’s remark seems to have caused panic
among the power distribution company’s shareholders given the past on and off discussion
on possible renewal of its lease with Uganda Electricity Distribution Company
But Patrick Bitature told the meeting that if the
company lost concession, it would pay shareholders more than Ushs 600 per
share, and that the government would have to pay more than US$ 300m in
He expressed worry that the comments are discouraging
investments because no investor wants to make a long-term investment in a
concession that is not certain of renewal.
Umeme has been operating in Uganda since 2005 under a
leases from Uganda Electricity Distribution Company Limited.
The National Social Security Fund is the largest shareholder with 23% shares,
having invested more than Ushs 400b when the company first issued shares in the
stock market. The investment has since gone down to about Ushs 80b, despite Umeme
consistently making huge profits.
The factors affecting the share price is said to be the bad image of the
company, mainly to do with unstable supply of electricity the high tariffs,
which lead to calls for the cancellation of the concession.
In a cautious statement NSSF Managing Director Richard Byarugaba says they
cannot afford to see the company fail because millions of Ugandans have an
interest in it through the NSSF shares.
He said the shareholders and the president have a
reason for their sentiments.
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Board Chairman Bitature allayed the fears of the shareholders, and assured them
that the company will successfully go through the negotiations.
Terming the government as a tough negotiator, he
equated Umeme’s situation to what the oil and gas companies about the East
African Crude Oil Pipeline deals that were recently signed in Kampala.
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Meanwhile Umeme shareholders
approved a total dividend payout of shs19.8 billion after endorsing shs12.2 per ordinary share based on the
company’s 2020 performance.
The dividend will be paid
out on or about July 19th 2020, to shareholders in the Company’s
register at the close of business on 25th June 2021.
The shareholders also re-elected Mr. Patrick Bitature as the Chairman
of the Board via the hybrid/ electronic AGM held at the Kampala Serena Hotel.
Hon Gerald Ssendaula and Ms. Florence N Mawejje were also
re-elected as directors of the Board.
The AGM also approved the appointment of M/S Ernst & Young
Certified Public Accountants as external auditors for 2021 and the remuneration
of the Non- Executive Directors.
Bitature thanked the shareholders for their continued trust and
confidence in him to lead the Board of Uganda’s leading electricity distributor
at this pivotal period in time.
“We are continuing to engage the government on an early concession
renewal post the 2025 concession. We are optimistic we shall reach a mutually
beneficial agreement,”Bitature said.
Bitature said even with the difficult foregoing circumstances,
Umeme has transformed for the better and for the people.
“We continue investing
in digital and ICT solutions for the ease of our business solutions and
services for our customers,” he said.
He said the issues around reduction in power tariffs was an
interest to all the energy stakeholders.
“Umeme remains committed to playing its part of the equation
through driving distribution efficiencies, increasing consumption and
investments in the system to evacuate the increased generation capacity,”
Selestino Babungi, the Managing Director, said although the
profits declined, the utility managed to complete its capital investment
programme of $75m (about sh279b) to improve the network distribution capacity,
supply reliability and operational efficiencies.
The investment went into the building and upgrading 7 substations
in Ntinda, Kakiri, Gulu, Mbale, Bombo and Nakawa, constructing distribution
integration lines with transmission infrastructure, expansion of distribution
transformer zones and conversion of 168,000 customers to prepayment metering.
He said the performance reflected the challenging operating and
“We shall continue to focus on safety, continuity of electricity
supply services, resolution of the regulatory matters, operational and
financial performance,” he said.