By Our Repoter
Uganda’s main electricity distribution company Umeme, like so many others across the continent, has faced numerous challenges over the years. Not least in the last decade and a half in its current guise under a concession management arrangement for the distribution network following the electricity sector reforms at the turn of the century.
At that time, electrification in the small East African country was less than 10%, corresponding to fewer than 3 million of the then 30 million population, and mainly in the urban areas.
Electricity losses were high, around 40%, and Umeme’s collection rates were running at less than 40% due to these losses and non-payments.
During the late 1990s and early 2000s, more and more utilities in Africa turned to a prepayment metering model. Around 2010, Umeme, headquartered in Uganda’s capital Kampala and whose distribution concession covers most of the urban areas of Uganda and mainly around Kampala and Entebbe, decided to do likewise.
At the time a tender was put out for a small pilot of 10,000 prepaid meters, the associated vending, management and consulting services, with the aim to assess acceptance of the technology by Ugandans. The area selected for the pilot was Kitintale, a middle income area in the east of Kampala, close to the shore of Lake Victoria.
Following numerous meetings, presentations and a company due diligence, South African-based metering solutions provider Conlog was awarded the contract, marking the start of a partnership that has endured to this day.
The offer was for the supply of 10,000 BEC44 split-wired type meters in 1-way and 4-way boxed enclosures with MCB, Ultima Vending and Management. In addition, a locally based Conlog technical representative would be on hand for nine months to assist and consult and provide ready response.
The 10-month pilot rollout proved highly successful, and after converting its initial base of 300,000 customers to prepayment, Umeme has grown to a current base of over 1.5 million.
Over the same years, the national electrification level has grown to almost 30%, with much of that growth during the past five years.
With prepayment bringing Umeme’s collection level up to nearly 100% and electricity losses running at just over 16% in 2019, the company is targeting 4 million customers in the next few years.
Over the past decade both the energy and investment outlooks have changed in Umeme and Uganda.
New procurement requirements have opened the way for Chinese entrants, including Hexing, Inhemeter and XJ Group. These companies have supplied approximately 250,000 STS meters to Umeme.
Nevertheless, Conlog remains a major supplier to Umeme, with products ranging from its wBEC 44 and BEC 23 single phase meters to the wBEC 62 and BEC 66HC three phase meters. The newest product for supply is the PLC meter, which will commence with the rollout phase in quarter 1 of 2021.
Like companies the world over, Umeme’s business has been impacted by government responses to theCOVID-19 virus. During the first half of 2020, both electricity demand and electricity sales declined while losses increased marginally due to a scaling back of field loss reduction activities. Subsequently, these have largely recovered.
Nevertheless, the company has continued its activities as far as it was able to. In its latest annual overview (for June 2020) Umeme reported connecting almost 55,000 new customers to the grid with the financial support of government. Moreover, almost 100,000 customers were converted to prepayment metering, with a further 95,000 due for conversion by the end of 2020.
Prepaid metering is critical in the fight to reduce energy losses and improve company cashflows while delivering exceptional customer experience, Umeme said in its report. Over 95% of single-phase customers are on prepaid metering, contributing 27% of the company revenues from electricity sales.
The company also noted that the Electricity Regulatory Authority had approved an investment in the upgrading of the prepayment vending environment, which was reaching its customer limit. The upgraded system is expected to provide a better service experience to customers through increased capacity, stability and faster throughput.
With a realignment of financial priorities by government following COVID-19 and the potential for increased non-technical losses due to theft, in July 2020 Umeme upped its investment in the distribution networks.
The investment, bringing the total to date to over $650 million, was focussed on further addressing losses and improving efficiencies as well as power supply growth and reliability. With these developments Umeme anticipates boosting new connections to up to 300,000 per year.
Uganda’s connection policy requires 60% access by 2027 and 80% by 2040.
“With the new capital investments we expect to boost our new customer connections, while at the same time investing in leveraging technology and business process improvements to reduce power losses and continue delivering more reliable power affordably,” said Umeme’s managing director, Selestino Babungi.
Conlog has been a pioneer in the modern generation of prepayment metering – as distinct from the coin-fed meters of yore – and the emergence and adoption of STS as a global standard. Conlog, which boasts a global footprint with a base of over 12 million smart meters and prepaid solutions servicing over 90 utilities, defines key management responsibilities as ensuring that the meter is as accurate, robust and reliable as possible.