Noticeable steam last rose from the restaurant’s chimney-mouth in March. In April, the neon light box with the cafeteria’s name went down. Then the doors closed. Midtown Eatery is just one of the many commercial enterprises that shut while others scrambled down on operations from mid-March through May.
Power distributor Umeme says the shutdown of businesses to contain Covid-19 led to a 28.7 per cent drop in electricity consumption between January and April 2020. Umeme, which has a 98 per cent market share, says usage dipped from 9.4 gigawatt hours (GWh) in January to 6.7GWh in April.
Remarking on the drop, Umeme’s managing director Selestino Babungi recently told journalists that “this was expected because industries and small and medium enterprises were closed.”
According to the ‘Covid-19 Business Survey March and April 2020’ by the Uganda Bureau of Statistics, 24.5 per cent of the firms in the manufacturing sector closed as a result of Covid-19.
In the housing and food services sectors, 29.7 per cent of the players closed shop, which is 0.3 percentage points above the national average for all sectors. With up to two-thirds of the manufacturing firms working below 75 per cent during the lockdown, it was inevitable that power consumption would be impacted accordingly.
The situation was not any better in the services sector since many entities whose staff resorted to working from home cut on office air conditioning, printing, lighting, vacuum cleaning, the use of microwave ovens and urns.
Commercial and industrial concerns used over three quarters of the power the utility distributed in January 2020 to June while domestic consumers accounted for the balance (22 per cent). Thus, consumption by the two significantly impacts on overall consumption levels.
With a reduction in consumption, Umeme’s revenue from sales dropped by an equivalent of Shs 13 billion for the period January 2020 compared to the same span in 2019, according to Umeme’s interim condensed financial statements for the period ended June 30, 2020.
The utility added that cash generated between January and June was Shs 24 billion while profit after tax was Shs 22 billion compared to Shs 106 billion and Shs 61 billion respectively over a similar span in 2019.
Umeme attributed the low cash generated to delayed recoveries from free electricity connections (Shs 94 billion), drop in energy sales and cash collections.
Revenue collections dropped to 93.3 per cent compared to 98.7 per cent over the same period in 2019. To mitigate the impact of Covid-19 on business, the government had directed utilities not to disconnect customers for unpaid bills.
While consumption by commercial and industrial users dropped, usage in homes picked up because many workers were working remotely and pupils and students stayed home. However, it was not enough to compensate for the decrease in consumption by the hospitality industry, offices and factories.
Covid-19 also impacted on operations. Critical workers that travel restrictions found outside Uganda could not enter Uganda; so, some projects, such as the Siti II hydropower plant evacuation line, whose construction, now at 96 per cent, is on the home stretch, slowed.
Babungi said that after government eased the lockdown, energy consumption has been rising.
“As of June, we were seeing demand rising up to 8.3GWh per cent as the economy opened,” he told reporters then, adding, “collection is back up where it should be, where we are doing an average of 99 per cent.”
The government has since June been easing restrictions, such as the curfew hours, enabling businesses to open for more hours.
Less demand for energy is an additional cost to government since it leads to an increase in payments to power companies for deemed energy, which is electricity that is available but not consumed.