Note: This is our record of what transpired in the meeting. Not verbatim.

Meeting Uganda Post Ltd/ Posta Uganda (UPL)

Discussed in the Committee on Commissions, Statutory Authorities and State Entreprises on May 6th, 2015

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The committee met Uganda Post Ltd/ Posta Uganda (UPL) on queries raised in the Auditor General’s report for 2010/11 to 2012/13 as mandated by Parliament rules of procedure. COSASE deals with volume 4 of the Auditor General’s reports which encompasses all statutory authorities and MDAs.

In 1998, Uganda attempted to loosen its control in the communication sector, the Uganda Post and Telecommunications Limited was split into; Posta Uganda Limited, Uganda Telecom Limited, Post Bank Uganda Limited and Uganda Communications Commission as the industry sector regulator.

Posta Uganda Limited deals with the delivery of postal services majorly mail, cargo, logistics and financial services. It’s from these services that the entity generates revenue because it doesn’t get a portion from the consolidated fund. Posta Uganda realizes an annual turnover of about UGX 18-19 billion.

Honorable Ssemujju chaired the meeting and the procession form Posta Uganda was led by Mr. James Arinaitwe, the Managing Director who gave responses to queries raised by the Auditor General as follows.

The query on share capital that was noted in the 2011 and 2012 audits, where in both years UGX 19.487 billion was paid up for 77,487 ordinary shares but no share certificates were issued to support the amount. Management intimated to the committee that the issue had been discussed with the shareholders and will be sorted when the annual general meeting is held in July this year. Noteworthy is that the Company has no board and hasn’t held their annual general meeting in a very long time.

The performance of the budget was also queried by the Auditor, in 2010/11 UPL prepared a revenue budget of UGX 14.341 billion and expenditure of UGX 13.561billion. Unexpectedly the entity spent UGX 15.170 billion and raised revenue of UGX 17.998 billion indicating over expenditure and under budgeted revenue respectively. Management explained that both incidences were as a result of the 10 new buses in the form of increased revenue and increased operationalization costs that were not considered at the time of budgeting. In 2012/13 the company also experienced a revenue shortfall of UGX 5.658 billion which is 23.3% of the budgeted revenue.

Management admitted to the fact that unrealistic targets were set while on the other hand demand for traditional postal products were plummeting. New products like the financial services were not launched when they were due. They had since reduced their target to a more realistic UGX 19.5 billion.

Non remittance of statutory deductions was noted by the auditor in 2011/12 where UGX 3.677 billion in respect of statutory obligations to respective entities (NSSF UGX 570,677and URA PAYE UGX 707.580 million, Corporation Tax UGX 1.682 billion and VAT UGX 716,312 million). Although NSSF was settled, an MOU was signed with URA for payment in instalments. In 2012/13, the company did not remit Local Service Tax to the tune of UGX 83.124 million to respective local authorities. Non remittance attracts additional costs in penalties and litigation. In a related manner, in 2012/13, URA penalized UPL with UGX 140.917 million for failure to pay taxes. The committee resolved that the accounting officers will be held liable.

Some Properties owned by UPL did not have title deeds or had not had their titles changed from Uganda Post and Telecommunications Limited or had expired leases since these properties weren’t owned by the company legally, they were prone to being taken by non-owners. The queries re-occurred in all the years (2010/11-2012/13). These properties include post offices at Luwero, Kakira, Atiak, Kaliro, Busembatya among others. The Masaka post office had no title deed as it is misplaced.

UPL also didn’t fix credit limits for its customers contrary to its finance policies and procedures manual. Any credit facility extended to a customer should not go beyond three months and in 2011/13 debts to the tune of UGX 1.730 billion were outstanding for more than 90 days. Management explained that a draft credit policy was awaiting approval of the board as well as intensifying the review of accounts payable.

Other queries included disposal of property to the IGG at UGX 5.4 billion and the money supposed restructure assets and working capital was used to offset long outstanding liabilities, the company according to Certificate of Incorporation is recorded as Uganda Post Ltd while it is trading as Posta Uganda, payment of electricity bills to Uganda Telecom and inadequate asset management.

 

 

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