SGS Records UGX 74Bn Loss

According to a letter seen by Uganda Radio Network written by the Minister of Works and Transport Gen. Edward Katumba Wamala to the Attorney General and Parliament, the Company has issued a notice of breach of contract with his Ministry.
13 Oct 2020 18:55
Société Générale de Surveillance,(SGS) staff inspecting a tax at Kawanda inspection station

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Societe Generale de Surveillance (SGS) the company contracted to conduct the mandatory vehicle inspection has reported a loss of 74 Billion Shillings. The loss was incurred when the company's activities were suspended by Parliament in 2017.

According to a letter seen by Uganda Radio Network written by the Minister of Works and Transport Gen. Edward Katumba Wamala to the Attorney General and Parliament, the Company has issued a notice of breach of contract.

In March 2015, Government through the Ministry of Works and Transport signed a US Dollars 12.5m contract with SGS to carry out routine mandatory motor vehicle inspection in Uganda and before the implementation process, SGS invested in setting up different testing stations across the country.

The company later commenced services in 2016 after the gazettement of the Statutory Instrument No.51 of 2016 and the Traffic and Road Safety Motor Vehicle Inspection Regulations.

However, the development attracted public criticism pointing at high inspection fees, bribery, influence peddling, lack of clarity on how the company would hand over to the government when its exclusive 5-year contract expires and others.

This resulted in the suspension of the company activities in 2017 and a Parliamentary investigation into allegations of fraud by SGS. But Parliament has since not concluded on the matter after the presentation of two Physical Infrastructure Committee reports carrying conflicting recommendations, with the minority report calling for the termination of the contract which was supported by the legislators.

“SGS should be found culpable of peddling corrupt practices by offering inducements, offers, promises, and rewards to the employees of Ministry of Works to influence the actions of public officials during the procurement of the process,” read part of the Minority Report.

A vote on the matter was deferred pending the Attorney General’s opinion who in May 2018 cautioned against termination of the contract saying that the move would lead to the payment of huge compensation and damages by government.

“We don’t find any justification to impute fraud on the part of SGS…having been cleared by the Attorney General, the contract is valid, as far as we are concerned, there is nothing in the contract that violated any provision of the constitution,” said the then-Deputy Attorney General Mwesigwa Rukutana.

His opinion did not convince MPs forcing the Deputy Speaker Jacob Oulanyah to defer debate on the matter and to date, no decision has been made by Parliament.

In a letter written to Parliament’s Physical Infrastructure Committee Chairperson Robert Kafeero by Wamala indicates that since the suspension of SGS activities in 2017, the company lost US Dollars 20 million approximately 74 billion Shillings.

“To date, SGS has been meeting the maintenance costs as well as staff salaries. This in addition to the initial investment and accumulated losses caused by the lack of revenues during the suspension of the program exceeds USD 20 million. This is, therefore, to forward the notice of breach of the 2016 Agreement and its 2020Addendum from SGS for your attention,” reads the Minister’s letter dated 10th September 2020.

Kafeero told URN that his committee has since interfaced with officials from SGS over the matter as well as a freshly signed addendum to the initial contract with the Company in which inspection fees for vehicles and motorcycles have been reviewed downwards.

Asked about the committee position on the SGS notice of contract breach and the financial loss, Kafeero said that they had agreed on the best way forward and that their report on the matter would be tabled immediately after Parliament resumes business. Speaker Rebecca Kadaga last week adjourned the House sine die as legislators prepare for nominations ahead of the 2021 general election.

//Cue in: “they clarified that…

Cue out:…isssues were harmonized.”//

URN learnt that the addendum to the SGS contract signed in April 2020 reduced inspection fees for motorcycles by 80 percent while vehicle inspection fees are reduced by 60 percent. This means that motorcycle inspection is to be charged 11,000 Shillings down from the previous annual charge of 54,752 Shillings while buses are to be charged 50,000 Shillings down from the initial fee of 59,000 Shillings.

Inspection of Taxis is reduced to 90,000 from 100,000 Shillings while inspection of trucks is now set at 96,000 from the initial 147,500 Shillings. According to the renegotiated fees, each vehicle is supposed to be inspected after every two years.     

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