Defence and Veterans Affairs Minister Kiryowa Kiwanuka has told Parliament that the National Enterprise Corporation (NEC) has never participated in the implementation or operation of Uganda’s Intelligent Transport Monitoring System (ITMS), despite signing agreements with Joint Stock Company Global Security (JSC GS).
Kiryowa clarified on Wednesday, while appearing before the Parliamentary Committee on Physical Infrastructure together with the NEC Board of Directors, the corporation’s involvement in the digital number plate project and its arrangements with JSC GS.
The Minister said NEC signed a Memorandum of Understanding (MoU) with JSC GS on March 22, 2019, to facilitate technology transfer for the establishment of an ITMS in Uganda.
He said the 2019 MoU was intended to provide a framework for discussions and negotiations that would eventually lead to a Joint Venture (JV) Agreement.
“Under Article 1(a) of the 2019 MoU, the purpose of the MoU was to establish a formal platform through which the parties would commence discussions and negotiations regarding the implementation of the ITMS project, which discussions were envisaged to culminate in the execution of a Joint Venture (JV) Agreement,” Kiryowa said.
He added that the MoU expressly stated that it did not constitute a contract between the parties.
According to Kiryowa, the MoU was valid for six months and would either be replaced by a JV agreement or terminated in accordance with its provisions.
He said it therefore did not create a continuing contractual obligation between NEC and JSC GS.
However, the two entities resumed discussions four years later and signed a Cooperation Agreement on November 22, 2023, concerning the creation, installation, upgrading and operation of the ITMS.
Under the agreement, JSC GS was to work with NEC in establishing, upgrading, installing and operating the system, while the responsibilities of each party were set out in the agreement.
The agreement also provided for NEC’s participation in the operation of the ITMS and entitled the corporation to five per cent of fines and penalties collected through the system as its fees.
“The Cooperation Agreement, therefore, established a subsequent contractual framework between NEC and JSC GS, distinct from the 2019 MoU, and contemplated NEC’s substantive participation in the ITMS project,” Kiryowa said.
Despite the agreement, however, Kiryowa said NEC was never effectively integrated into the project. “Notwithstanding the execution of the Cooperation Agreement, NEC has never been effectively involved in the implementation or operation of the ITMS project,” he said.
The Minister said several key provisions of the Cooperation Agreement were never implemented.
He said land that NEC was required to provide for the project was not used for the intended purpose, while the Joint Venture contemplated under the agreement was never established.
Kiryowa further said NEC was never integrated into the implementation or operation of the ITMS and consequently did not exercise its contractual rights, including its entitlement to five per cent of fines and penalties generated by the system.
“The circumstances mentioned above indicate that the Cooperation Agreement has not been implemented in accordance with the parties’ agreed arrangements,” he said.
Kiryowa said JSC GS’s failure to undertake the obligations required to operationalise the partnership and involve NEC in the ITMS raised concerns of non-performance or material breach of the Cooperation Agreement.
He said NEC had, to date, never participated in the creation, installation, upgrading or operation of the ITMS.
The Minister added that the failure to establish the contemplated Joint Venture and NEC’s absence from the project had prevented the corporation from carrying out its intended role and receiving the commercial returns envisaged under the agreement.