Govt seeks Shs26b to buy shares in Abubaker Technical Services

It is not clear what percentage of shares government is seeking to acquire.  

In a September supplementary request, the Ministry of Finance noted that it needed Shs300.2b to be channeled to UDC through Ministry of Trade to buy shares in Abubaker Technical Services at Shs26.15b, while Shs247.1b would go to purchasing a stake in Atiaka Sugar Factory.  

Mr Patrick Birungi, the UDC executive director, yesterday told Monitor that whereas they were yet to receive the money, the request had been captured in a supplementary schedule, part of which would go towards buying shares in Abubaker Technical Services. 

“Yes Abubaker [Technical Services] needs a bailout as one of the local construction companies with a clear business line (projects) to be executed,” he said, noting that the company had approached government for support. 

However, he did not indicate which challenges had made Abubaker to seek government’s support but noted that whereas the company had requested a bigger amount of money, government was only willing to provide Shs26.1b.   

Mr Moses Kaggwa, the Ministry of Finance acting director economic affairs, said the purchase of shares had been endorsed and the process would be completed soon. 

“We intend to buy shares in that company [Abubaker Technical Services]. The process has not yet been concluded. Once we give them money, then the process will be concluded,” he said. 

Efforts to get a comment from Abubaker Technical Services proved futile by press time. Phone calls to known company officials went unanswered by press time. 

Abubaker Technical Services is a local civil engineering and construction company with a line of clientele, among which include, Kampala Capital City Authority, Uganda National Roads Authority, Civil Aviation Authority, ministries of Works and Lands. 

The company, which was registered in 2002, has also executed a number of World Bank funded projects in different parts of Uganda.  Yesterday, Mr Muwanga Kivumbi, the Shadow Finance minister and MP for Butambala County, said while considering one of the loans to be undertaken, government had brought in Abubaker as one of the local companies that required a bailout. 

However, he said, a number of questions had been raised among which included what criteria government had used to conclude that it needed to buy shares in Abubaker. 

“The question we asked was fundamental. Why Abubaker, why Roko?  What criteria does government use to pick out either Abubaker, Roko or any other company,” he wondered. 

In July, Parliament passed a proposal in which government had sought more than Shs207b to acquire 150,000 preference shares in Roko Construction Company. 

The money for the troubled construction company was passed amid protestation in which some MPs questioned how government had concluded that it was sufficient to bailout Roko. 

Unanswered

Mr Muwanga said, Abubabker’s request for a  bailout had come at a time immediately after Parliament had handled Roko’s request.

However, he said, a number of questions had been asked but remain unanswered. “Most of these companies have a common denominator, they have elements of sole proprietorship and failure to do effective corporate governance. Failure to transit their businesses from personal success to corporate sustainability which largely entails a financial problem, governance challenges and financial discipline,” he said.

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