Defence firm not making profits
Aug 19, 2009
THE National Enterprise Corporation (NEC) has not made profit since inception 20 years ago, officials said yesterday.
By Mary Karugaba and Henry Mukasa
THE National Enterprise Corporation (NEC) has not made profit since inception 20 years ago, officials said yesterday.
Speaking to the Parliament, the corporation chief, Rtd. Col. Fred Mwesigye, blamed the situation on the Government.
“We have failed to break even because we are not getting business from the Government and the army,†Mwesigye said.
He also blamed the Government for subjecting the corporation to “rigorous procurement proceduresâ€, which had made it hard for it to outsource for business.
In the financial year 2005, the corporation lost sh2.6b, and sh3.5b in the next year, according to documents. Another sh2.3b and sh1.9b was lost in 2007 and 2008 respectively.
Mwesigye attributed the losses to a big asset base leading to high depreciation cost of over sh1.3b, lack of business, a big salary bill and an unreliable power supply.
In response, defence minister Crispus Kiyonga said the business was being restructured so that it is able to meet the demands of the army. “We plan to take on joint venture agreements with companies abroad to build railways, roads and bridges.â€
However, when queried further, he said the army did not have funds for development work and it could, therefore, not contract NEC.
NRM committee members Theodore Ssekikubo, Rose Namayanja and Saleh Kamba accused the ministry of suffocating the corporation by creating parallel departments, such as the Engineering Brigade, to do the same work.
Kamba said the ministry spends over sh2b on vehicle maintenance in private garages, which NEC could do in its motor vehicle workshop.
He wondered why the Government had held onto an unprofitable business for 20 years.
The MPs also proposed that the ministry should stop outsourcing contracts and employ NEC.
THE National Enterprise Corporation (NEC) has not made profit since inception 20 years ago, officials said yesterday.
Speaking to the Parliament, the corporation chief, Rtd. Col. Fred Mwesigye, blamed the situation on the Government.
“We have failed to break even because we are not getting business from the Government and the army,†Mwesigye said.
He also blamed the Government for subjecting the corporation to “rigorous procurement proceduresâ€, which had made it hard for it to outsource for business.
In the financial year 2005, the corporation lost sh2.6b, and sh3.5b in the next year, according to documents. Another sh2.3b and sh1.9b was lost in 2007 and 2008 respectively.
Mwesigye attributed the losses to a big asset base leading to high depreciation cost of over sh1.3b, lack of business, a big salary bill and an unreliable power supply.
In response, defence minister Crispus Kiyonga said the business was being restructured so that it is able to meet the demands of the army. “We plan to take on joint venture agreements with companies abroad to build railways, roads and bridges.â€
However, when queried further, he said the army did not have funds for development work and it could, therefore, not contract NEC.
NRM committee members Theodore Ssekikubo, Rose Namayanja and Saleh Kamba accused the ministry of suffocating the corporation by creating parallel departments, such as the Engineering Brigade, to do the same work.
Kamba said the ministry spends over sh2b on vehicle maintenance in private garages, which NEC could do in its motor vehicle workshop.
He wondered why the Government had held onto an unprofitable business for 20 years.
The MPs also proposed that the ministry should stop outsourcing contracts and employ NEC.