Meeting Uganda Electricity Transmission Company Limited (UETCL)
Discussed in the Committee on Commissions, Statutory Authorities and State Entreprises on November 13th, 2014
The meeting was chaired by the committee chairperson Hon. Ibrahim Ssemujju Nganda who met with Management of UECTL regarding the queries that arose in the Auditor General’s report of 2012.
Management gave a brief overview of the Corporation; the accounting officer stressed that it was the major buyer of electricity in Uganda and that they had the capacity to buy all the electricity generated in the country. The committee went ahead to ask general questions that are related to the operations of the Corporation. The following were some of the queries that arose in the report;
UETCL’s financial statements indicated a long outstanding balance and receivables of UGX 30.9 billion and 37.1 billion respectively dating as far back as 2001 and 2002 that it owed to Uganda Electricity Generation Company Limited. These debts were awaiting Parliament’s approval for a write off. Management of UETCL said the matter arose in 2002 when government revised the tariff downwards and Uganda Electricity Distribution Company Limited (UEDCL) that UETCL sold the electricity to,failed to pay hence marring its ability to pay the generation company. They told the committee that they were undertaking negotiations with their different stakeholders to have the debt written off.
Also noted was the fact that UETCL did not remit VAT on power purchases and therefore faced a risk of being penalized by URA. Management made the committee aware that it was government’s obligation to remit this VAT and not the company as the VAT statute considers a VAT subsidy contributed by government to be a VAT exemption.
The audit also discovered that assets belonging to UETCL had not been adequately insured and gave a list of the assets, however in their response UETCL said most of the assets listed as non-insured had just been commissioned and still had warranty until July 2013.
The report also discovered that UETCL had power purchase and Sales agreements that differed in terms of rates and billing currencies. In an agreement with Bujagali Energy Limited (BEL) it was stated that in the event that the corporation did not adhere to terms and conditions it would pay a penalty of 11% per annum and this paid in US dollars where as in an agreement with UMEME they would pay a penalty of +3% per annum. This exposed the company to exchange rate volatility. Management told the committee that they had written to BEL to amend the terms of the agreement.
The report also indicated that there was UGX 12 billion shillings that government instructed UETCL to divert for payment of pensions of former UEB staff had not been paid to date, the audit suggested this money be recovered lest they face a risk of depletion of working capital. Management assured the committee that they were working hard to reminding the government of its obligation to the Corporation.
The audit report also noted that UETCL didn’t have an adequate training policy. The existing training policy was approved in 2002 and not supported by the structure training plan. The committee also expressed their displeasure in the fact that the company paid money for a person not part of their staff to be trained abroad.
Another contentious issue that arose was that UETCL outsourced services of a law firm that is owned by the by Corporate secretary to the Board who was present when all board decisions were being made. It was also noted that PPDA regulations were not followed when procuring this firm. On the same, UETCL had paid for a trip for this individual to the USA for a number of days. They also expressed their discontent in the fact that this firm had on several occasions lost cases but still got paid for services. MPs asked if board did not find it odd to be operating in such a manner. Management told the committee that a procurement process for another firm was underway and the decision to facilitate the individual was unanimous by the board.
For all the issues that the company didn’t avail evidence the chairperson asked for it in a week’s time and the meeting was brought to a close.