Umeme gets Sh2.5bn funding to rehabilitate network
Umeme technicians repair power lines in Kampala. This is IFC’s second loan to support Umeme’s expansion plan for 2013-2017. PHOTO | FILE
What you need to know:
This is IFC’s second loan to support Umeme's 2013-2017 rehabilitation plan after the utility firm received $70 million in December 2013.
The plan mainly involves the upgrade and expansion of medium voltage transmission lines and substations as well as the introduction of pre-paid meters across its customer base.
The Sh2.5 billion ($25 million) from IFC will constitute half the amount Umeme is seeking for network expansion with the other half to be sourced from other banks.
Ugandan power distributor Umeme Ltd is set to receive a Sh2.5 billion ($25 million) loan from the International Finance Corporation (IFC) to fund the expansion and upgrade of its distribution network.
This is IFC’s second loan to support its 2013-2017 rehabilitation plan after the utility firm received $70 million in December 2013.
The four-year capital expenditure plan mainly involves the upgrade and expansion of medium voltage transmission lines and substations as well as the introduction of pre-paid meters across its customer base.
“IFC is now proposing to increase its commitment to finance this program by an additional debt financing of $25m,” the agency, which is the World Bank’s private lending arm, said in a statement.
Umeme, which is cross-listed in Kenya and Uganda, holds a 20-year concession from 2004 for distribution of electricity in Uganda.
The $25 million from IFC will constitute half of the amount Umeme is seeking for expansion with the other half to be sourced from other banks.
The capital expenditure is expected to help the company handle more power with Uganda planning to increase its electricity generating capacity to at least 1,500 megawatts in the next three years from 850MW.
Uganda currently has 862 MW of installed electricity generation capacity with the access rate at 20.4 per cent.
Currently, there are two large hydropower plants under construction that will be commissioned before 2020 - the 600 MW Karuma Project and the 183 MW Isimba project.
Other five small hydropower projects with a combined capacity of 36.3 MW that are under construction are expected to be commissioned by 2018.
Uganda’s power demand is growing at 10-12 per cent annually driven by domestic and industrial demand.
The firm supplies over 800,000 customers - mainly located in the semi-urban corridor linking Kampala, Entebbe and Jinja.
The IFC has a 2.8 per cent shareholding in Umeme acquired during the 2012 Initial Public Offering (IPO).
