Project detail - Umeme Limited

Who is our customer

Umeme is the main electricity distribution utility in Uganda, with a 98% market share. The company served over 1.3mln customers at the end of 2018. The Company operates under a 20y concession from the Government of Uganda and the Uganda Electricity Distribution Company (UEDCL), to operate, maintain, upgrade and expand the electricity distribution system. Umeme is a listed on the Uganda securities exchange and cross listed on the Nairobi securities exchange.

What is our funding objective?

As a distribution company, Umeme needs to continue making CAPEX investments in order (i) to further improve the grid; (ii) to support the ongoing efforts to increase electrification from the current 23% to 40% by 2025; (iii) complement the significant growth in generation capacity that is coming online in the coming years; The financing is part of a larger already ongoing CAPEX investment program, aimed at developing the distribution infrastructure, including the network up-grade and expansion. Together with lenders, FMO has provided funding to Umeme Limited in 2016 for the investment program until 2018, hence the new funding will support the new investment program of 2019-2024. FMO will continue to act as B-Lender behind the International Finance Corporation (IFC).

Why do we fund this investment?

The investment program has the intention to create substantial development impact. The financing will help reduce distribution losses, increase collection rates, improve operational efficiency, altogether reducing the cost of electricity. The investment in a distribution company in a Low-Income Country in Africa, has a very good fit with FMO’s energy strategy. Further, Umeme is an existing client that FMO wants to support further.

What is the Environmental and Social categorization rationale?

This is a category B+ project with potential limited adverse social and environmental (E&S) risk and / or impacts that are few in number, largely reversible and readily addressed through mitigation measures. The following IFC Performance Standards are applicable for this investment: PS 1 - Assessment and Management of Environmental and Social Risks and Impacts. Applicable due to environmental and social impacts as a result of the Project. PS 2 - Labor and working conditions. Applicable due to labor involved in Project activities. PS 3 - Resource Efficiency and Pollution Prevention. Applicable due to Construction activities and/or Operational activities, as part of the Project; Energy Efficiency is included as a major result of refurbishing and upgrading. PS 4 - Community Health, Safety and Security. Applicable as local communities might be impacted as a result of Project activities. PS 5 - Land Acquisition and Involuntary Resettlement. Right of Way with respect to land, etc. is required as a result of the (construction as part of) Project activities. FMO will continue to evaluate the possibility of the following performance standards being triggered as part of further investments from Umeme’s side: PS 6 - Biodiversity Conservation and Sustainable Management. The Project may impact biodiversity (for example: waste, T-line routing, etc.). PS 7 - Indigenous People. so far, the Environmental and Social Assessments done for the project did not identify any people qualifying as Indigenous, however further analysis will we done for future investments. PS 8 - Cultural Heritage. so far the Environmental and Social Assessments done for the project did not identify any relevant objects or sites as referred to under PS 8; however further analysis will we done for future investments.

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2/13/2024	USD 7.00 MLN