NEC Has Never Participated In Digital Number Plates Project – Defence Minister Tells MPs

The Minister for Defence and Veterans Affairs, Hon. Kiryowa Kiwanuka, together with the Board of Directors of the National Enterprise Corporation (NEC), has appeared before the Parliamentary Committee on Physical Infrastructure over the issue of digital number plates, on the status of the arrangements between NEC and Joint Stock Company Global Security (JSC GS) regarding the establishment and operation of the Intelligent Transport Monitoring System (ITMS) in Uganda.

The Minister highlighted the involvement of NEC with ITMS, stating that on March 22, 2019, NEC entered into a Memorandum of Understanding (MoU) with Joint Stock Company Global Security (JSC GS) for the purpose of facilitating technology transfer in the field of an Intelligent Transport Monitoring System (ITMS) to be set up in the Republic of Uganda.

“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. Importantly, Article 1(b) expressly provided that the MoU was not to be construed as constituting a contract between the parties,” Hon Kiryowa said.

He further highlighted that the 2019 MoU was for a period of six months until it is replaced by the Joint Venture Agreement or terminated as per Article 4. Consequently, the MoU did not, in itself, create a continuing contractual obligation between NEC and JSC GS.

Four years later, NEC and JSC GS revived their engagement and on November 22, 2023, entered into a Cooperation Agreement concerning the creation, installation, upgrading and operation of the Intelligent Transport Monitoring System in Uganda.

“Under the Cooperation Agreement, JSC GS undertook to work together with NEC in the creation, upgrading, installation and operation of the ITMS. The respective responsibilities of the parties were expressly provided for under the Agreement, with the obligations of NEC set out under Article 2 and those of JSC GS set out under Article,” noted the Minister.

The Minister proceeded to clarify that the Agreement further provided for NEC’s participation in the operation of the ITMS and stipulated that, during the operation of the system, NEC would be entitled to five per cent (5%) of the fines and penalties collected as its fees as per Article 5.

“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,” Minister Kiryowa further clarified.

Minister Kiryowa Kiwanuka, therefore, denied any allegations of NEC being involved in the implementation or operation of the Intelligent Transport Monitoring System (ITMS) in Uganda as of today.

“Notwithstanding the execution of the Cooperation Agreement, NEC has never been effectively involved in the implementation or operation of the ITMS project,” clarified Hon. Minister Kiryowa.

Minister Kiryowa Kiwanuka clarified that NEC was only involved with this ITMS project under the Cooperation Agreement, however, the following clauses of the Agreement were never implemented:

a) The land which NEC was to provide as part of its obligations under the Cooperation Agreement as provided under Article 2.1(i) was not utilised for the intended project.

b) The joint venture contemplated and agreed upon by the parties under Article 5 was never entered into.

c) NEC has not been integrated into the implementation and operation of the ITMS as contemplated under the Cooperation Agreement.

d) Consequently, NEC has not been able to effectively exercise its contractual rights or perform its intended role under the Agreement, including its entitlement to receive 5% of the fines and penalties arising from the operation of the system.

“The circumstances mentioned above indicate that the Cooperation Agreement has not been implemented in accordance with the parties’ agreed arrangements. In particular, the failure by JSC GS to undertake the agreed obligations necessary to operationalise the partnership and involve NEC in the ITMS project raises significant concerns regarding non-performance and or material breach of the Cooperation Agreement,” stated the Minister.

Minister Kiryowa conclusively cleared all rumours, stating that NEC has to date never participated in the creation, installation, upgrading and operation of the ITMS arrangement.

He said the absence of NEC’s participation in the project and the failure to set up the contemplated Joint Venture have effectively prevented NEC from implementing its mandate under the Agreement and from realising its expected commercial returns.