{UAH} Allan/Pojim/WBK: Oh Boy!!!!!! Auditor General questions value of Crested Towers

http://www.observer.ug/business/38-business/44921-auditor-general-questions-value-of-crested-towers

Auditor General questions value of Crested Towers

Written by ALI TWAHA

An audit report released by the Office of the Auditor General shows that as of the year ended June 30, 2015, there was a loss in property fair value of Crested towers (CT).

The report pins National Housing and Construction Company (NHCC) - the owner of the two towers - for devaluing the property, which led to a fair value loss of Shs 4bn. This was even after enhancement works had been carried out.  

"During the reporting period ended December 31, 2014 the company (NHCC) carried out repairs on Crested Towers building worth Shs 597,850,311," said the audit report authored by the auditor general, John Muwanga.

"However, the subsequent internal revelation by the company resulted in a decrease in its fair value from Shs 74.0bn in the previous year to Shs 70bn worth the resultant decrease in value amounting to Shs 4bn, despite the enhancements undertaken by the company," the report adds.

The Stanbic bank headquarters at Crested towers

Muwanga's report warned there was a risk the company is not undertaking adequate maintenance and repairs on the property to enable it preserve its value.

"I have accordingly advised management to ensure the appropriate measures are undertaken to avoid further loss in value of the property in question," Muwanga advised.

The auditor general's report is subject to discussions in parliament through the Public Accounts Committee. The taller tower of Crested towers has 20 floors while the shorter one has 11.

The towers house some of the major institutions in town such as Stanbic bank Uganda and the offices of the delegation of the European Union. 
Parity Twinomujuni, the chief executive officer of NHCC, says the valuation of the property may vary from one valuer to another.

"It's not that we have run down the building. They are drawing those conclusions from someone who is valuing for them [government]. The valuation that we have [currently for 2015] is over Shs 80bn worth. It's the most valued building in town," Twinomujuni told The Observer in a phone interview.

In the past, NHCC has received several proposals from corporations and individuals expressing interest in acquiring the property. The building, according to NHCC, fetches Shs 13bn in rent annually, which Twinomujuni says, they cannot afford to lose. The National Resistance Movement and the National Social Security Fund are among those that are interested in acquiring the property, according to NHCC.

"They are wrong on that assumption and we cannot sell off the property… It gives us a return of more than 16 per cent annually," Twinomujuni says. 
NO DEBT WITH GOVT

Meanwhile, the audit report seems to quash claims by the NHCC, which noted that the ministry of Defence and State House had failed to clear rent arrears in some of the properties it owns.

Speaking during the launch of the Rwizi Apartments in Mbarara in April this year, Orono Otweyo, a board member at NHCC, said a number of government departments renting NHCC properties owe them arrears.

"The government of Uganda owes the company a lot of money in excess of Shs 20bn. This money has been outstanding for quite a long time," Otweyo said.

The audit report notes that the existence and value of this debt cannot be verified due to lack of agreements with either the ministry of Defence or State House. Also, it says the two entities do not recognise the liability due to NHCC of similar amounts in their financial records.

"In absence of such agreements, I am unable to authenticate the value of the debt from both government entities," Muwanga said.
PROPERTY SELL-OFF

Following fruitless efforts to recover the rent arrears, NHCC's management is now engaging the two government departments to resolve the issue by offering to sell off the occupied properties to the respective ministries.

Although the discussions are ongoing, the negotiations for the sale are only considering the sale price, but not the outstanding rent arrears. Currently, government holds a 51 per cent stake in NHCC while the Libyan government has 49 per cent. 
alitwaha9@gmail.com 

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Auditor General questions value of Crested Towers

http://www.observer.ug/business/38-business/44921-auditor-general-questions-value-of-crested-towers

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