8 November 2012

Uganda: Parliament Demands Statement On Umeme

Two days after Umeme closed its Initial Public Offer (IPO) parliament wants Finance Minister Maria Kiwanuka to make a statement on whether the Capital Markets Authority undertook due diligence before the company floated its shares to the public. MPs led by Latif Ssebaggala and Mathias Mpuuga sought the explanation from the deputy Speaker of Parliament, Jacob Oulanyah. Following approval from the Capital Markets Authority (CMA) and the Uganda Securities Exchange (USE), Umeme offered shares to the public from October 15 to November 7, with a hope of raising Shs 171.2bn from the more than 622 million shares up for grabs. Each share was sold for Shs 275.

However, Parliament is yet to discuss a report on the energy sector in which Umeme's dealings were a matter of contention. The MPs also want to know whether Umeme sought the consent of the Uganda Electricity Distribution Company Limited (UEDCL) before trading in its shares.

"Umeme does not own any assets in Uganda. The assets portrayed in the Umeme prospectus belong to the government of Uganda through UEDCL," Mpuuga said.

The legislators also want the minister to explain whether Umeme has filed tax returns with the Uganda Revenue Authority.

"We have information that Umeme has been reducing its taxable income by approximately $25m per annum through depreciating UEDCL assets on its income statements to URA and it is acknowledged by the commissioner general of URA to the ad hoc committee on electricity together with the submission by ERA which also acknowledged this fact," Mpuuga added.

State minister for Finance Fred Omach has undertaken to make a statement to the House next week, as Kiwanuka was absent.

"The issue of the IPO offer has ended and we undertake to give a statement on the subject," he said

However, we understand that before the finance ministry makes a statement, MPs led by Mpuuga, Medard Sseggona, Wafula Oguttu, Odonga Otto and Wilfred Niwagaba want Parliament to direct the USE and CMA not to list the company before the energy report is debated by the House.

"We also want the money that Umeme got from the IPO arrangement to be returned to the public because there is no binding contract yet between the company and the people," Mpuuga told The Observer.

Efforts to speak to Umeme's Head of Communication Henry Rugamba were futile as his phone calls went unanswered. However, early this week Rugambwa told The Observer that the company had nothing to hide and was following the capital market rules on full disclosure.

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