The former finance minister, Gerald Ssendaula, has defended the transaction in which NSSF agreed to buy shares in Umeme in 2004, saying it was aimed at promoting local investment in the power company.
By Vision Reporter
The former finance minister, Gerald Ssendaula, has defended the transaction in which National Social Security Fund (NSSF) agreed to buy shares in Umeme in 2004, saying it was aimed at promoting local investment in the power company.
Giving the background of the relationship, Ssendaula, who is now a director in Umeme, said in 2004, the Government through the privatisation policy decided to involve the private sector in the supply and distribution of electricity.
“Therefore, the electricity distribution system was transferred from the Uganda Electricity Board to the Uganda Electricity Distribution Company Limited (UEDCL).
“It is within this setup and the Government policies on privatisation the Umeme and UEDCL entered into a concession (lease and assignment) agreement,” he said.
Ssendaula appeared before the ongoing parliamentary probe into the alleged mismanagement at NSSF on Tuesday to explain the role he played as the then finance minister in the formation of the relationship between the Fund and Umeme.
This follows the recent revelations by Umeme’s company secretary, Noah Mwesigwa that the insertion of NSSF in Umeme’s articles and memorandum of association 10 years ago, originated from negotiations they had with Ssendaula and other officials at the Privatisation Unit.
The retired politician, banker and farmer noted that the support agreement was entered into to further demonstrate the support and cooperation between the Government and the private sector.
“The agreement was entered into so as to enforce these obligations for the stability and smooth operations in the electricity sector. I signed the support agreement as a representative of the Government of Uganda,” he told the select committee chaired by Fort Portal Municipality MP Alex Ruhunda.
Ssendaula stressed that Umeme is under the obligation to operate and maintain the distribution system and finance (ministry), to manage the restoration and reinforcement of the distribution system.
He said the support agreement also envisaged and made provision for local investment in Umeme following Government prior written approval of such transfer of shares by Umeme.
“Therefore, section 6.2 (v) of NSSF provides that Government approves the sale of shares to NSSF, to the Ugandan employees of Umeme and sale of shares through the Uganda Securities Exchange. The objective of this clause was to promote local investment in Umeme and this objective was at the time seen a positive benefit for the Ugandan who sought to invest.”
The committee, however, took exception to the reports that the Fund, which had over a sh1trillion then invested in Umeme, a company worth only $50,000 (about sh120m).
The meeting is today scheduled to interface with the former NSSF managing director, Chandi Jamwa.
Ex-finance minister Ssendaula defends NSSF-Umeme deal