Umeme Ltd, recorded notable growth in electricity sales and profits at the end of 2019, boosting its share price last week.
However, persistent uncertainty surrounding renegotiation of Umeme Ltd’s 20-year concession agreement remains a thorny issue for investors and analysts.
The company’s dividend per share increased from Ush40.9 ($0.01) in 2018 to Ush41.3 ($0.0105) in 2019, which slightly raised its share price at the Uganda Securities Exchange (USE) from Ush245 ($0.06) to Ush246 ($0.062) after the release of its 2019 full year results.
“The government has indicated that negotiations for the renewal of the concession agreement may start. Umeme will among other matters indicate how it proposes to meet the national goals and thereby the needs of all consumers…” reads a statement signed by Patrick Bitature, Umeme Ltd’s board chairman.
Umeme Ltd has borrowed more than $100 million from various lenders for rehabilitation and expansion of its distribution network.
The firm’s sales revenues increased from Ush1.5 trillion ($380 million) in December 2018 to Ush1.8 trillion ($456 million) in December 2019, a trend mainly driven by new consumers at the Namanve and Nakaseke Industrial Parks with an estimated 12 manufacturing factories.
Large industrial and commercial consumers account for roughly 70 per cent of Umeme’s electricity sales.
The utility firm’s customer numbers increased by 14 per cent to 1.5 million users in 2019.
Its profits after tax rose from Ush132.8 billion ($33.7 million) in December 2018 to Ush 139.2 billion ($35.3 million) in December 2019 while total assets expanded from Ush2.3 trillion ($582.9 million) to Ush2.5 trillion ($633.6 million) in the same period.