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 MEME shareholders met for the annual general meeting in Kampala.
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.
The President in said the government could bypass the Umeme system when supplying to industrial parks.
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 limited.
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 unrecovered investments.
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.
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.
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,”
Bitature added. Mr. 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 regulatory environment.
“We shall continue to focus on safety, continuity of electricity supply services, resolution of the regulatory matters, operational and financial performance,” he said.