Umeme

Formation

Umeme was formed in 2004 when the government of Uganda sold the Uganda Electricity Distribution Company Limited to a consortium belonging to Globeleq (56 percent), a subsidiary of the Commonwealth Development Corporation of the United Kingdom, and Eskom (44 percent), the electric generating company of South Africa. The transfer of assets did not take place until 1 March 2005.

During 2006, the consortium formed by Globeleq and Eskom was restructured, with Globeleq becoming the sole owner of Umeme.

On 15 October 2012, Umeme became a listed company on the USE. A total of 622,378,000 shares, representing approximately 38 percent of its issued share capital, became listed on the Ugandan bourse in an initial public offering (IPO). The shares of the company started trading on the USE on 30 November 2012. Umeme shares were first cross-listed on the NSE on 14 December 2012, with active trading commencing on 31 July 2013. The company expected to use the proceeds from the IPO, estimated at UGX:171 billion, to expand its power distribution network and payoff debt.

Ownership

As of November 2016, the ten largest shareholders in the stock of the company were:

Management structure

The Umeme board of directors has six members, five of whom are non-executive. Patrick Bitature, one of the non-executive directors, serves as the chairman of the board. Umeme is structured into twelve management departments, each headed by a senior manager. The senior managers form the Executive Committee, whose members were the following as of March 2016:

Under the Executive Committee, Umeme has 25 other managers who assist the executives to implement company policy and run the company on a daily basis. In March 2015, Selestino Babungi was appointed managing director, replacing Charles Chapman who served in that role from February 2009 until March 2015.

Unreliability of service

Within Uganda, Umeme is known for chronic unreliability and has been accused of corruption. Customers frequently face extended service outages, which are occasionally followed by protests, riots, and assaults on Umeme employees.

Protests and rioting

In 2010, protests erupted after a two week power blackout in the town of Bugembe. Attempts to disperse the protesters led to violent clashes between police and irate residents. Nine were arrested, with eight being charged with inciting violence, staging an unlawful and violent assembly, and insulting the police.

In 2011, a two month power outage led to protests in Jinja. Residents and business owners built barricades, set tires ablaze, and blocked traffic. Police responded with tear gas and live ammunition. Days later, over 100 people were dispersed by riot police using tear gas and rubber bullets after marching on Umeme's offices in protest of recurring outages in Masaka town.

In 2012, after a month-long outage along the Kampala–Gayaza Road, stone-throwing protesters caused property damage and injuries.

In 2014, a Umeme manager in Mubende was beaten severely by an infuriated mob during power-related protests at the Kasambya trading centre. The ensuing battle between rioters and security forces resulted in 15 arrests and one other injury, including a trader who was shot twice. Later that year, Kampala print and publishing shop owners went on strike, blocked Nasser road, and burnt paper and plastic to protest six-day power cuts along the road. Security forces used tear gas to disperse the protesters.

Recommendations by parliament

In 2013, a probe committee of Uganda's Parliament recommended cancellation of Umeme's contract due to its chronic failure to provide reliable services, which would trigger a contract severance payment of at least US $148 million.

The following year, Uganda's Parliament recommended that Umeme's "contract should be terminated” due to the gross manipulations encountered in the procurement of the Umeme concession, and the scandalous provisions of the power distribution agreements signed between the government of Uganda and Umeme. Ultimately, this course of action was decided against because it would have been too expensive and politically complicated.

Power losses

In June 2016, Umeme estimated its total power losses across its network at 19.1 percent. In September 2016, Umeme estimated that it lost UGX:106 billion annually from nonpayment of bills, vandalism, and illegal connections. Fifty-one percent of its losses come from the Bugisu sub-region in the Eastern Region.

In June 2015, Umeme estimated its power losses at 19.2 percent. Of that, 13 percent was attributable to technical losses (resulting from poor network configuration) and 6.2 percent was from commercial losses (such as power theft and under-billing).

Umeme plans to reduce total power loss to 15 percent by 2018.

History

In May 2010, Umeme's communications director Charlotte Kemigyisha wrote a commentary in the Daily Monitor newspaper urging public support for President Yoweri Museveni's proposal to make electricity theft a capital offense.

In December 2010, Umeme announced plans to invest US$32 million during 2011 in new substations, improvements in grid connectivity, and the introduction of pre-payment systems.

In November 2013, Umeme announced that it had secured loans totaling US$190 million from the International Finance Corporation, Standard Chartered Bank, and Stanbic Bank to fund grid expansion and reduce energy losses.

Umeme is spending US$440 million between 2013 and 2018 to overhaul equipment, buy technology, and add distribution points.

In March 2016, the Daily Monitor newspaper reported that Umeme had signed a contract with the Uganda Electricity Transmission Company Limited to distribute the power generated from the Isimba Hydroelectric Power Station, due online in 2018, and the Karuma Hydroelectric Power Station, due online in 2020.

In September 2016, a senior Umeme executive said that the company planned to spend US$2 billion over the next five years to expand the grid and increase access rates from an estimated 20 percent in 2016 (about 900,000 subscribers) to 40 percent in 2020 (about 3 million subscribers).