Uganda Electricity Distributor UMEME targets financial markets to raise over USD170M

Uganda utility service provider, Umeme, is targeting the capital markets to raise over $170 million (about Shs438 billion) to finance its investments.

The energy utility firm last week said it needs to make significant investments worth $440 million (about Shs1.1 trillion) in the next five years, part of which will be raised during the this season.

“We need to finance several infrastructural projects in Uganda and this is one of the ways to raise the money,” said company publicist, Mr Henry Rugamba.

He added that some of the targeted projects include the prepaid metre system around the country worth $200 million (about Shs516 billion); to widen the niche in rural areas, among others.

The company has been cast in the spotlight over its failure to improve the ageing network system and reduction of losses through its 25-year concession with the government.

The move comes barely a year after the firm which is 60 per cent owned by Britain’s Actis fund reaped close to $66 million (about Shs170 billion) from the Initial Public Offering (IPO).

Mr Rugamba, however, said much of what was made at the IPO was used to pay shareholders and finance its loans.

This newspaper, however understands that about $69 million (about Shs178 billion) will be put up by the private investment arm of the World Bank, International Finance Corp (IFC).

The IFC already holds a 3 per cent stake in Umeme since late last year and has lent $25 million (about Shs65 billion) to the company in 2009; which Umeme insisted had paid back.

Attempts to get a comment from IFC officials were fruitless by press time, as the Ugandan office referred to the Nairobi office as the one authorised to comment on the matter.

The company is also pushing for an increase in the electricity tariffs from Shs524.5 to Shs593.9 and Shs487.6 to Shs540.4 for domestic and commercial consumers, respectively, to raise more income.

The Monitor Newspaper
22-July-2013