Time series analysis of the impact of electricity losses on firm performance in the electricity distribution sector. Case study of UEDCL/UMEME

Abstract

Electricity distribution losses remain a persistent challenge in many developing countries and continue to affect the operational efficiency and financial sustainability of electricity distribution firms. This study examines the impact of electricity losses on firm performance in Uganda’s electricity distribution sector, focusing on Umeme Limited and Uganda Electricity Distribution Company Limited. The study employs a time series analysis using secondary data obtained from sector reports and operational records covering the period 2008–2025. The research analyzes trends in electricity losses and evaluates their relationship with key firm performance indicators including energy purchases, energy sales, number of customers, number of employees, network length, operation and maintenance costs, and distribution infrastructure such as transformers and meters. Descriptive statistics are used to examine data trends, while econometric techniques including stationarity testing, multicollinearity diagnostics, and regression analysis are applied to determine the magnitude and direction of relationships between electricity losses and firm performance variables. The findings are expected to provide empirical evidence on how electricity losses influence operational efficiency and revenue generation in the electricity distribution sector. The study contributes to policy discussions on loss reduction strategies and provides recommendations that can help improve efficiency, strengthen regulatory oversight, and enhance the overall performance of electricity distribution firms in Uganda.