The National Social Security Fund (NSSF) has today defended the purchase of Umeme shares worth 34 billion Uganda Shillings in May 2014 after parliament had recommended the termination of its contract. Geraldine Ssali, the acting Managing Director NSSF, today reaffirmed that they had followed the procedure when the additional shares were purchased. Ssali further said that there were no indications from cabinet and the Ministry of Finance that the Umeme concession was going to be terminated.
Members of Parliament last week raised the red-flag on the move by NSSF to purchase the shares in the power distribution company, Umeme. MPs indicated that NSSF had ignored their recommendation and purchased the shares. They also pointed out that during the purchase NSSF management had skipped the process of getting approval from the Solicitor General. Geraldine Ssali, the acting Managing Director NSSF, today reaffirmed that they had followed the procedure when the additional shares were purchased.
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Ssali further said that there were no indications from cabinet and the Ministry of Finance that the Umeme concession was going to be terminated.
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Ssali was receiving a cheque worth 3.4billion Uganda Shillings from Umeme as dividend payment for their shareholding in the electricity distributor.
She also noted that if they had delayed the purchase any further, they would have lost out on the shares. NSSF holds a 14.3percent shares in Umeme, with its stake currently valued at 90 billion Uganda Shillings. Ssali said they have invested member funds worth 70 billion Uganda Shillings in Umeme. The NSSF investment value in Umeme alone has gone up by 38 percent.
For members, Ssali said that there was a possibility of a double digit interest payment on their contributions. NSSF’s interest rate has for the last two years been below 10 percent and generating close to zero returns on member funds. This financial year, Ssali said the performance of NSSF’s investment was affected by a drop in returns from the treasury bills and bonds.
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Currently, the pensions sector is undergoing some reforms, among them the amending of the NSSF Act. Among the reforms is to reduce the red-tape around investment decisions in order for NSSF to compete with other players, once the sector is liberalized. The Pensions Liberalization Bill 2012 is currently at committee level in parliament.
Ssali is among other NSSF officials who are likely to appear before a select committee – yet to be instituted - in parliament to answer questions on the purchase of Umeme shares and abuse of office.