Ibrahim Kasita
7 July 2009
Kampala — Onek cracked the whip on the energy sector activities
INVESTORS are concerned over the manner the energy minister, Hilary Onek, has handled power tariffs investigations. The minister, two weeks ago, asked the Criminal Investigations Department to stop the former UMEME boss, Paul Mare, from leaving the country before investigations over suspected high power tariffs and UMEME's operations are complete.
The Police anti-fraud squad raided Mare's home, took his photograph and downloaded personal files from his computer. The Police also raided offices of electricity companies and the energy ministry.
However, investors in the sector condemned the action, saying the minister rushed to involve the Police, a move they said would "destabilise the sector."
"Are we back to the old days of Amin where every minister could use the Police or security operatives to harass citizens and investors?" asked one investor.
"There is no problem in investigating the computation of the power tariffs but the minister cannot handle this matter outside the law, which mandates Electricity Regulatory Authority (ERA) to do so."
The Electricity Act of 1999 allows ERA to establish a tariff structure and investigate tariff charges, whether or not a specific complaint has been made for a tariff adjustment.
"This is not a sensible way of resolving problems. It shows poor management and leadership. "I am sure he (minister) did not consult his technical people," an infuriated source in the investment cycles said.
"If he had consulted them (ERA), he could not have acted in such an irrational manner that is threatening to scare us (investors) away from investing in energy infrastructure."
The energy sector is in dire need for investments because the demand for electricity outstrips supply due to low investments. This has led to load-shedding, which has pushed the cost of doing business up and rendered local products and services uncompetitive in the region.
Kabagambe-Kaliisa, the energy permanent secretary, refused to comment on the matter. "I don't discuss official matters with the press," he retorted.
The concerns come at a time when President Yoweri Museveni is looking for investors to inject money in the energy infrastructure.
The investors pointed out that in this era of economic liberalisation, the electricity regulator should handle unresolved issues since the law empowers it to do so. However, Onek in a letter dated July 2, 2009 to the ERA, retracted the Police from the investigations.
"The Inspector General of Police and the Director of the Criminal Investigations Department are advised to pass on the collected information to the consultant (Deloitte)," he wrote.
But documents seen by The New Vision indicated that a financial audit of Uganda Electricity Board and the successor companies had been commissioned as early as July 15, 2008. ERA procured Deloitte and Touche, an international audit firm, to carryout the forensic audit.
The scope of the work included determining the extent of surplus subsidies received from the Government compared to tariff rebate subsidies paid to UMEME in respect to thermal costs.
Deloitte was also supposed to establish from a value-for-money point of view the extent these successor companies have been efficient in their operations and maintenance activities over the years.
The audit centred on the Uganda Electricity Generation Company, the Uganda Electricity Transmission Company, the Uganda Electricity Distribution Company Ltd, and UMEME.
"I think he (Onek) later realised that he was wrong and decided to withdraw the Police from the investigations," said a source familiar with the saga. Kabagambe-Kaliisa in a letter dated July 15, 2008, also directed ERA to review the policy on investment of the energy sector.
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