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Businessexcellence ACHIEVING

O N L I N E

UMEME www.umeme.co.ug

C O R P O R AT E B R O C H U R E

Electri

outlaws

W

e’re familiar with gun armistices where illegal weapons are handed in without fear of reprisal. Some countries do something similar when trying to coax illegal immigrants out of the shadows and into the mainstream. But in Uganda, they have their own variation—an electricity armistice.

Umeme is Uganda’s main retail power distribution company, which established its operations in Uganda in March 2005 under a 20-year concession with the government of Uganda. It’s been financed by a major investment from the Actis Infrastructure 2 fund which, in turn, has the UK government’s Commonwealth Development Corporation (CDC) as its largest investor.

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Umeme

Umeme

Tanelec Limited Tanelec Limited’s distribution transformers are used by utilities in over 10 countries in the East & Central Africa region. Our range of low voltage and medium voltage switchgear is used in factories, housing, shopping malls and multi-user developments as well as being supplied to utilities in the region.

Our capacity to service, repair and refurbish distribution and power transformers from any manufacturer in the world sets us apart as the solution provider of choice to industry and utilities.

All our products are manufactured to meet local needs and conditions and tested in accordance with IEC specifications, meeting international standards.

Actis takes an exclusive interest in emerging markets, investing widely in Asia, Africa and Latin America. It has over 100 investment professionals in nine offices worldwide who currently manage funds of US$4.8 billion across a portfolio of around 60 investments, on behalf of more than 100 institutional investors. Its aim is to promote sustainable growth in the private sector of emerging markets by ensuring that the capital raised and managed makes a lasting, tangible and positive difference; creating opportunities for the companies in which it invests, as well as their stakeholders in the process.

When Umeme took over responsibility for energy distribution in Uganda, it inherited an outdated network which, for a long time, had received little investment and even less maintenance.

Not surprisingly, there was a drastic need for a national refurbishment programme of the entire network if Umeme was to meet its objectives of a stable and reliable power supply for all.

Not least of the many problems Umeme faced was the highly dangerous practice of consumers helping themselves to free electricity. Alongside relatively dangerous tampering with electricity meters, Umeme has to contend with the highly dangerous installation of illegal supply lines.

To counter such behaviour, Umeme is taking a carrot and stick approach. A rolling programme of updating the network is taking place throughout the country, typical of which is that recently completed in the Acholi quarters of Kireka, in

Kampala. For the extremely modest cost of €14,000, a new three phase supply has been commissioned in this suburb. Umeme staff found that most of the meters had been tampered with and needed to be replaced—but provided residents undertake to protect the meters as though they were their own, Umeme has agreed that no further recriminations will occur.

At the same time, though, residents have had to enter a partnership with Umeme and Uganda’s police force to ensure all electricity connections remain legitimate. A hotline has been established though which consumers can report illegal tampering—not to mention theft of copper wire, transformers and feeder pillars, which not only causes danger to the public but also inconveniences the customer and damages the economy because of lost production. Umeme hopes to convince the majority that having a reliable supply, backed by the promise of rapid repairs, is sufficient incentive for reporting the minority.

In the past, though, wrongdoing has been a two-way street, with unscrupulous employees of Umeme collecting money from residents but then pocketing it rather than handing it in. As a result, Umeme now has an absolute zero tolerance policy against corruption at any level. Consumers are encouraged to demand identification for all those claiming to be on official business.

But Umeme is well aware of the task it faces on both sides of the equation. It didn’t help that there were difficult economic conditions across the country as a whole when one of the company’s first acts was to introduce price increases of about 100 per cent in the end user tariff. Nevertheless, against this backdrop, Umeme is reasonably satisfied with the start it made. In its first three years, the company managed to bring down power theft losses to 33 per cent from a high of approximately 40 per cent in March 2005 when it took over the business.

Under the terms of its agreement, Umeme has a contractual obligation to invest US$65 million in the first five years of operation. Approximately half of this is coming from its shareholder, Globeleq, while the remainder is from its own resources.

Over and above its contractual obligations, Umeme intends to invest up to US$100 million during its contractual period in the business.

Umeme

Toyota Uganda Toyota Uganda, established in 2005, is owned 100 per cent by Toyota Tsusho Corporation, a wholly owned subsidiary of Toyota Motor Corporation. As the exclusive distributor of Toyota vehicles, it is the only company offering the Toyota manufacturer’s warranty in Uganda.

We supply brand new Toyota passenger, SUV, light 4WD, heavy 4WD and light commercial vehicles with professional after-sales support and genuine Toyota spare parts.

We have a fully supported 3S (sales, service and spare parts) centre in the capital city, Kampala, with 2S (service and spare parts) centres in Northern and West Nile regions of Uganda where major UN/ non-Governmental operations have spokes for their humanitarian and relief work.

We have highly skilled professional teams to meet customer automobile requirements, with 100 per cent technical and operational support from Toyota Tshuso Corporation and Toyota Motor Corporation.

Our vision is to be “the leading provider of quality service, delighting customers through valued people.”

risks as had once been the case.

The government is also feeling the benefit of a more professional regime behind electricity distribution. Under the terms of its agreement, Umeme must pay a monthly lease fee into Uganda’s coffers. Surprisingly, Umeme’s consistent payment record is the first time on record that the sector has met its obligations in this way.

Umeme is not the only distribution company; but where once different suppliers saw themselves in opposition, there is now better cooperation. A total of 32 rural schemes constructed by Uganda Electricity Distribution Company Limited/Rural Electrification Agency have been connected to the Umeme grid, in support of the national development effort.

Indirectly, Umeme has helped create over 1,000 jobs by subcontracting much of the refurbishment work to experienced local engineering firms but under the condition that they work with the same strict adherence to safety, health and environmental regulations.

Internally, the transformation process for Umeme has focused on splitting the core of the business into engineering (wires) and customer service (retail, billing and corporate communication)

“Residents have had to enter a partnership with Umeme and Uganda’s police force to ensure all electricity connections remain legitimate” At the heart of Umeme’s capital expenditure programme is the refurbishment and strengthening of the medium and low voltage reticulation networks. New substations are being constructed and others brought up to date. At the time of the concession, localities across half of the network were suffering from blown transformers or distribution poles that were either rotten or leaning over in a perilous state. As part of its operations and maintenance programme, Umeme has replaced hundreds of transformers and tens of thousands of poles. Not surprisingly, with safety holding a new level of importance, the improvements to equipment—and considerable emphasis on training—have made a significant difference to the safety and wellbeing of employees who no longer need to take the same

in order to improve upon existing business processes, something that was achieved within the first 12 months and has contributed to the overall improvement in service to customers.

In the background, Umeme has been working on presenting a professionally managed business by working towards compliance with international standards. As part of achieving its Vision 2010 programme, best practice procedures have been put into place to satisfy ISO 9001 certification and by the end of this year, it should also have achieved ISO 14000 certification.

One of the first steps taken after the restructuring was to create a new call centre with the aim of quickly resolving issues and disputes with customers that were holding back timely collection of dues.

Since then the centre has been upgraded and its role

Umeme

widened when it was ultimately integrated into a new billing system in the first part of 2009.

A considerable contributor to the administrative headaches for Umeme was its partly unknown customer base. In March 2006, Umeme commenced a countrywide electricity connection audit referred to as the “customer verification programme”. Within the first year, over half of the 300,000 known customers had been visited.

In addition to establishing exactly who Umeme’s customers were and where they were located, this data clean-up exercise checked on the connection at each of the premises to determine whether a customer/consumer was legal or not.

Such exercises are vital in reducing power theft, which ultimately is the best contribution possible to lower electricity prices.

The demand for power continues to increase and by the end of 2008 was running at 3,000 applications per month—more than double the situation at the outset. In fact, the level of consumer contact is at an all-round high. Part of the agreement was that Umeme should contact 60,000 customers within the first five years of operation—a target that was exceeded after just three and a half years.

Once the basic improvements had been set in motion, Umeme decided that it should measure its performance; and in July 2007, it implemented a customer satisfaction measurement tool called Maxicare. Each month, the satisfaction levels of over 200 customers are sampled, with the results forming the basis of its customer focus programme. Umeme has an overall target of achieving 80 per cent customer satisfaction, which would put it in line with internationally recognised performance levels for utility companies. From an average score of 62 per cent at the initial survey rating period, results are now in the upper 70s for all aspects of the business, including safety, the call centre, technical issues, accounts/payments, the environment and overall service delivery.

October 2007 saw the commencement of the installation of a new customer care and billing system, its role being to improve upon billing processes and customer relations management.

By presenting a more reliable and caring face to consumers, Umeme is hoping that the need for armistices will soon be a thing of the past. www.umeme.co.ug

UMEME www.umeme.co.ug