Umeme Ltd recently secured $190m (Ushs 485 billion) long-term financing to support its US$440m (Ushs 1.1 trillion) capital investment programme.
The programme will among others finance the national prepayment meters rollout which is ongoing currently.
Umeme staff at work
The financing which is the largest-private sector corporate financing in Uganda to date has been obtained from the International Finance Corporation (IFC), Standard Chartered Bank and Stanbic Bank.
It comprises of $170m term loan priced at LIBOR (London Interbank Offered Rate) plus 5%, with IFC and Standard Chartered Bank each providing $70m, and Stanbic Bank providing $30m.
It also includes $20m revolving credit facility with SCB providing $15m and Stanbic Bank providing $5m.
The term loan with a 2.5 year availability period is repayable over 7-10 years and carries a principal grace period of 3 years.
Umeme Managing Director Charles Chapman said the financing will be used to strengthen the distribution network to cope with the current demand and in preparation for new generation from Karuma, Isimba and others planned by government.
The funds will also be utilised to reduce energy losses and increase distribution efficiencies, increase access to electricity through new connections, and to drive safety improvements and enhancements.
Umeme Board Chairman Patrick Bitature described the signing as a milestone for the energy sector which has never had anything of this magnitude invested in the distribution network.
He hailed the financiers for their confidence in Umeme and assured them of visible transformation and good governance in the utilization of the funds.
Mr. Bitature pointed out that the financing reflects the evolution of Umeme’s capital structure from reliance on shareholder funds, to DFI funding and now commercial lending which demonstrates confidence in, and sustainability of, Umeme’s business model.