Umeme exaggerated its investment by sh75b - MPs

Nov 22, 2011

Umeme inflated its investments in the country’s energy sector by $23.4m (over sh75b).

 By Moses Walubiri

 
Umeme inflated its investments in the country’s energy sector by $23.4m (over sh75b), according to its summary of assets for the years 2005 to 2010.
 
The managing director of the Uganda Electricity Distribution Company Limited (UEDCL), Joseph Katera, yesterday told MPs on the ad-hoc committee on energy that Umeme submitted assets worth $117m, of which $23m worth of assets were “disqualified.”
 
Katera told MPs that verified Umeme investments as at November 16, were worth $87m.
 
He noted that some of the equipment Umeme had classified as investment were found to be those of “routine maintenance work.”
 
The issue of the level of Umeme investment is central to the current parliamentary probe into the energy sector.
 
Umeme committed itself in the concession agreement with the Government in 2004, to investing in the energy sector infrastructure.
 
The move was aimed at reducing commercial and technical losses, improve efficiency and customer care.
 
However, the level of Umeme’s investment would also determine its compensation if the Government either terminates its 20 year concession agreement or it decides to walk out of the agreement. 
 
UEDCL manager for technical services Franklin Kizito, however, admitted that Umeme had failed to invest in core assets that would have helped it achieve its contractual obligations.
 
This came after MPs questioned how expenditures on computers and communication equipment, instead of transformers and sub-stations could foster efficiency and reduce losses in the energy sector.
 
Katera also told MPs that Umeme would roll out mandatory prepaid metering system to help people use electricity they afford.
 
When asked about his assessment of Umeme, Katera admitted that it had “failed in many aspects” and called for “tough conditions in the imminent review of the concession agreement.”
 
“The reviewed concession agreement with Umeme should define investments in order to spend more on core assets, improve customer care and reduce losses and give a time line for rolling out prepaid metering,” Katera said.
 
“If Umeme finds these conditions unacceptable, then it should walk out of this agreement at their own volition,” he added.

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