Meeting with Rural Electrification Agency.
Discussed in the Committee on Commissions, Statutory Authorities and State Entreprises on September 1st, 2016
The Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises held a meeting with Rural Electrification Agency (REA), today 1st September 2016. The meeting was chaired by Abdu Katuntu, the Committee Chairperson, also Bugweri County Member of Parliament. The REA team was led by its Deputy Executive Director, Godfrey Werikhe.
REA appeared before the Parliament Accountability Committee to respond to queries raised by the Auditor General. In his report, the Auditor General revealed that REA has outstanding compensation for way leaves (consents in writing that allows REA to put up electricity lines on people’s private land) Space for the power lines) amounting to UGX 18.3bn. The Deputy Director explained that the matter has been raised with Ministry of Finance to either provide adequate funds to settle the liabilities or Government to amend the relevant laws to make way leaves for rural electrification projects free as the case with other African Countries.
However, the Committee chairperson told the REA team that late compensation of ordinary Ugandans may have a great impact on the realization of the planned amendment of the Land Act to allow easy access of land by Government for public use. He said “you owe ordinary Ugandans UGX 18bn. This may have an effect on the success of the proposed Amendment to the Land Act”.
The Deputy Director explained that the outstanding compensation is not out of their wish but due to lack of money. He appealed to the committee to engage Ministry of Finance to give them money to compensate the people. He said “The budget process for FY2017/18, is soon starting. This matter can be sorted at the budget level. What we want is money”
The audit also indicated that REA has a number of outstanding receivable (income to be received by REA from agencies using its lines) from various companies. For instance, Uganda Electricity Transmission Company Limited owes REA UGX 32.5bn since FY2010/11. This arose from UETCL using REA’S 5% levy by UETCL to pay generation companies. UETCL maintains that Ministry of Finance did not refund them this money and the regulator also refused to include the amount due to REA in the tariff. UETCL also just resumed payment of UGX 9.03bn to REA. This was 5% levy for the period of April to June 2015 that accumulated due to suspension of remittance by UETCL on non-payment by UMEME.
REA is also demanding UGX 2.71bnn from Ferdsult Engineering Services Ltd. The private company claims that they cannot afford to pay lease fees on account of non-financial viability of the rural electrification program. The Deputy Executive Director informed the committee that the Board of REA has requested the Office of the Auditor General to undertake an audit of the company’s operation to verify its claims. The Board will base on this to make a final decision.
The meeting also discussed the anomalies in the Solar Subsidy program being implemented by REA. The Agency signed contracts with various solar PV companies with anobjective of installing subsidized solar panels to various end-users (individual andcommercial). Upon verification of the installations by the auditors (Fred Balikudembe, Mucunguzi Ezra and Denis Kakande) REA disbursed the subsidy amounts to the companies.
While appearing before the committee one of the officers in REA’s Internal Audit Office explained that they carried out an independent audit of the project and found out a lot of anomalies. For instance, Subsidies were claimed for beneficiaries reported as being members of SACCOs whereas they were not so as to cover up the cash sales. Some companies claimed for non-existent installations.
There companies who invoiced REA for systems at the commercial rate yet they were in fact solar home systems. REA was invoiced for solar panels that had been donated by third parties or fully sponsored by NGOs. Instances were found of the same systems billed twice with different names and phone numbers. Many beneficiaries continued to pay for after sales services even in the warranty period i.e. bulbs, transport, panel cleaning etc.
The officer who was at first hesitant to give details of the saga to the committee further explained to members of the committee that their internal audit revealed that all the 13 participating companies were engaged in anomalies. But most anomalies were than by Solar Sense Uganda Limited, Power and Communication, Victron and Naco.
Despite this, the Auditor General found out that the companies implicated continued to operate under the solar subsidy program and were paid a total of UGX 732.43m. The audit also revealed that although clause 7.12 of the contract between the Rural Electrification Board and the solar companies requires representatives of the board and the solar companies to meet on a quarterly basis to evaluate the implementation of the project, no quarterly meetings have been held by both parties so far.
The Internal Auditor also informed the committee that their audit revealed that there was conspiracy between the Auditors hired by REA to carry out the verification of the installations and the solar companies. These Auditors were given UGX 60m and they are having an outstanding balance of UGX 17m. The Deputy Director REA also added that since then, they terminated the contract of their officers who were on a 4-year contract. As a result of this, the officer reported that they lost USD 850,000 of the USD 4.5m project.
Members of the committee demanded to know the details of all the individuals and companies involved in the saga for them to take full action like having them blacklisted. “We want to communicate to Public Procurement and Disposal of Public Assets that not only companies themselves should be backlisted but even their shareholders shouldn’t engage in any government work again” Hon Katuntu said.
The committee also questioned the UGX 262bn that was given to Imperial Royale Hotel to buy electricity transformer during CHOGM. The committee found out that the two Presidential letters written to REA instructing it to pay the money had different figures. One with UGX 263m and the second one UGX 270m. The committee chairperson queried the authenticity of the President’s signature on both letters, as they weren’t similar.
Members of the committee were concerned with the way public money meant for rural electrification was used to buy electricity transformers for a private hotel which can afford to own its equipment. Also queried were the failure by State House to refund the money since 2006. “This request was made by the Head of State. Is it possible that this document did not originate from the Head of State or we are fearing to question the president?” a member asked
However, the committee chairperson assured his members that they will do everything possible to ensure that whoever misuses public resources is brought to book. “I put it on record that the committee which I head will question anyone in this country who doesn’t use public resources properly” he said
The chairperson informed the REA team that they will be called again to respond to some queries and that is when they will also be presenting the inspection report of the electricity transformer at Imperial Royale Hotel. He thereafter adjourned the committee meeting until further notice.