UPDF fights to recover from 31 billion NEC loss

President Museveni Commissioning a High Precision Workshop at Luwero Industries Ltd as Maj Gen James Mugira (L) looks on, in Nov last year. File photo

KAMPALA: 

The National Enterprise Corporation has embarked on projects to get out of a slump that saw the commercial arm of the UPDF operate below capacity for 30 years.

According to the 2015-2016 Auditor General's report, NEC registered a Shs31billion loss since its inception due to poor management of its enterprises.

However, Maj Gen James Mugira the new Managing Director told Daily Monitor that a spontaneous approach to revive the commercial arm of the army is underway and that signs of recovery are eminent.

“It is true there were losses registered but these are being written off through increased production and revitalization of all NEC subsidiaries,” Mugira said adding that, “from the time I took over this corporation, we have only registered profits to a tune of Shs1.7bn for the first time after several years…”

Mugira said with such developments, the corporation has potential to backtrack to its primary objectives of meeting the army’s commercial undertakings.

“The Corporation is doing so well and even at the close of last year, we were awarded the visionaries’ award for exceptional performance,” Gen Mugira said.

Mugira said that the NEC farm in Katonga is now more productive and has been earmarked for beef fattening with 3,000 heads of cattle to be stocked by end of March. This will aid government strategy of exporting hybrid beef products to the international market.

 “We are starting with our Katonga farm and later move to other ranches such as Kyankwanzi and those that will be identified by the ministry,” Gen Mugira said

So far 1,340 acres have been cleared and fenced while 31km out of 50km roads have also been completed.

Mr Vincent Sempijja the minister of Agriculture has since hailed the undertakings as significant to the country’s strategic business objectives.

The Turnaround

Initially, NEC had 17 subsidiaries but several have closed due to poor management, leaving the corporation with only six subsidiaries among them NEC Luwero Industries, The Katonga Farm, NEC Construction, Works and Engineering Ltd, NEC Uzima Water, NEC Tractor Project, and NEC Tractor Hire Scheme.

Those closed about two decades ago include; NEC Textiles, NEC Foam Products, NEC Bakery, NEC Delta Systems Ltd, NEC Lime Dura Ltd and Mukisa Biscuits among others.

All these subsidiaries according to the NEC Act of 1989 were expected to sustain the commercial needs of the army while contributing to the socio-economic development of Uganda but they have been operating below capacity.

Mugira said that, “it is true a number of them were not performing and a decision was taken to close them…so NEC remained with a leaner structure for the benefit of the security forces and the public.”

In July 2015, Mugira was moved from Luwero Industries to NEC Headquarters in Kampala on a turnaround mission to revitalise NEC objectives as a commercial unit of the army.

Sources within the army told Daily Monitor that Mugira’s transfer followed his exceptional performance in the revitalization of Luwero Industries which had also collapsed under previous leadership

Enter partnerships

The Kyoga Dynamics Emulsive Explosive Factory; a joint venture project between Luwero Industries Ltd, Ministry of Defence (Uganda) and China Wanbao Engineering Company, a subsidiary company under China North Industries Group Corporation for production of emulsion explosives and Ammonium Nitrate Fuel Oils (ANFO) is the third such factory in Africa after South Africa and Egypt respectively, but the only automated one.

The factory is charged with production and storage, blasting and sell of civil commercial explosives used in mining and infrastructure development.

This, Mugira said will save the country from spending on huge insurance premium involved in transporting explosives while safeguarding the country’s security concerns at the same time.

 “This is going to be advantageous to people involved in mining, roads and power dam construction and the standard gauge railway but also as a government in national counter-terrorism strategy,” said Gen Mugira.

Another subsidiary placed at the Center of Socio-Economic transformation is the NEC Works, which apart from undertaking construction works currently underway in Kisozi and Nakasongola, a source within NEC intimated to Daily Monitor that the company will spearhead the construction of the standard gauge railway.

“It will work with the UPDF Engineering Brigade to provide the labour for the construction of the SGR,” said the source.

The source also said that the company will soon be taking several tenders in major road construction works across the country.

Although Gen Mugira did not directly confirm the development, he said that NEC was repositioning itself to contribute to Uganda’s economy by providing low-cost products. He cited NEC Uzima Water which is supplied across the country.

Gen Mugira also refuted the Auditor General’s claims that the Corporation no longer employs military personnel as uninformed reporting saying Uzima, Luwero Industries and Kyoga Dynamics employ only soldiers.

The only grounded Subsidiary is the NEC Pharmaceuticals Plant in Bugolobi Industrial Area, but efforts are underway to revive it under a joint partnership according to Mr James Katongana, the Public Relations Officer.