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Why Museveni directed Minister Anite to audit UTL

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President Museveni has directed State Minister for Privatisation and Investment, Evelyn Anite to institute an audit in the activities of the struggling Uganda Telecommunication Limited (UTL).

In a letter dated July 16, 2019, Museveni said he had “heard of some allegations”.
“This is to direct you to institute an audit in the activities that are going on in Uganda Telecommunication Limited,” reads part of Museveni’s letter, a copy of which was seen Eagle Online.

For more than two years, UTL has been placed under administration and there is no sign that the company will change for the better.
In early 2017, UTL was in debts of more than Shs700 billion when the Libyans, who held 69 per cent shares, left.
At that time, government had to liquidate the firm or save its collapse by putting it under provisional administration to allow a search process for competent investors to take it over.

In May 2017, UTL went under Administration Deed and government appointed the Registrar General of Uganda Registration Services Bureau (URSB), Twebaze Bemanya, as the provisional administrator.
One of his tasks was to find an investor to buy UTL within six months. Others were to clear liabilities to all creditors.

However, the company did not attract a new investor and Bemanya’s provisional administration was extended twice by the Finance Ministry.

In May 2018, Museveni ordered that all government ministries, departments and agencies (MDAs) sign up UTL as their sole provider for internet services as part of efforts to make the company more attractive to a prospective investor.
Also the National Backbone Infrastructure (NBI) would be given to UTL by the National Information and Technology Authority (NITA) to ensure fiber network connectivity across the country.

A Shs200b debt UTL owed to government was also written off and turned into shares under Uganda Development Corporation (UDC).
In April last year, Cabinet extended UTL’s operational licence for 20 more years. This also included a directive that Uganda Communications Commission (UCC) expands the UTL reach to cover the whole country.
UTL  remains indebted to the tune of Shs536b, according to a bi-annual progress report for November 22, 2018 to May 22 this year that the administrator sent to the Commercial Court, all creditors and shareholders indicated.

The relationship between UTL and UCC is also on the rocks.
In an April 29 letter, Godfrey Mutabazi, the regulator’s executive director, wrote to Bemanya, saying it may not renew the UTL licence in June 2020 because the latter had not met the application process requirements under the law.

He also said  that UTL owes his agency Shs49.8 billion in pre-administration debt and Shs10.2 billion as part of the administration. Mutabazi also accused the company of failing to comply with the Uganda Communications Act 2013 which requires an installation of an Intelligence Network Monitoring System (INMS) to enable state agencies monitor telephone calls for security purposes.

He further faulted UTL for underutilising assigned mobile and fixed phone numbers, not complying with the directive on implementing Location Based Services (LBS), not submitting any of its networks and end-user device/terminals to UCC for approval; poor quality of service, using networks that no longer have manufacturer’s support services and failure to seek UCC approval prior to using short codes used by other network services.

Bemanya versus Anite
There has also been a protracted fight between Mr Bemanya and the Ministry of Finance.
Early this year, the ministry failed to have UTL audited on two occassions. The first was when Finance minister Matia Kasaija requested the Auditor General, John Muwanga, to audit UTL.
In April, Mr Muwanga wrote back to the ministry, saying he could not audit the company because “it is being supervised by court.”
The second attempt was by State Minister for Privatisation and Investment, Evelyn Anite, who asked Bemanya to allow the ministry audit the company.

Bemanya declined, saying such an exercise can only be conducted after the lapse of the Administration Deed in November.
After a week of confrontation through letters between Ms Anite and Attorney General, William Byaruhanga, and his deputy Mwesigwa Rukutana, President Museveni last Thursday ordered Justice and Constitutional Affairs minister Kahinda Otafiire to ensure UTL issues are presented before Cabinet before any further action is taken. The President insists efforts to revamp UTL through getting another investor must be explored first and Cabinet must take a decision on that.

The following day, Otafiire wrote to Bemanya to expedite the process of finding an investor before the company is liquidated.
“As the administrator of the company, you are requested to expedite the process of sourcing a strategic investor. You are required to continuously update me on the progress to enable me report to Cabinet accordingly,” Otafiire stated.
There are also other limitations that undermine the successful search for an investor for UTL as listed in the 2017 audit report of PricewaterhouseCoopers Uganda.

Anite in her recent communication said some individuals were oraginsing to take over UTL properties.

It noted that there was need for a restructuring plan that would include conversion of the Shs224 billion debt UTL owes to Ucom, a company owned by the Libyans, into equity.
The firm also recommended that the Uganda Posts and Telecommunications Corporation pension liability of Shs206 billion be taken over by government and converting the combined debt of Shs134 billion owed to government entities such as Uganda Revenue Authority, National Social Security Fund and UCC into equity.
The auditors argued that this would reduce the debt to Shs145 billion. However, this has not been done.


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