Parliament probes multi-billion shilling loss in Nile Hotel-URA case

Parliament is set to probe the UGX 7.77 billion loss incurred by Nile Hotel International Ltd (NHIL) to Uganda Revenue Authority (URA), following a court judgment that ordered URA to refund UGX 11.17 billion.

However, only UGX 3.41 billion was paid, sparking outrage among MPs over how such a deal was brokered.

Nile Hotel International Limited, a government-owned company, oversees Uganda’s interests in the concession with Kampala Serena Hotel and Igongo Cultural Hotel in Mbarara.

The Auditor General’s December 2023 report highlighted concerns over the funds lost to URA, despite NHIL winning two court cases against the tax authority.

Joseph Barungi, Manager of NHIL, explained that the legal battle began after URA conducted a tax audit, concluding that NHIL had not been paying Value Added Tax (VAT). NHIL argued that the tax was paid by Kampala Serena Hotel, the concession holder.

“We went to the Tax Appeals Tribunal and won the case. URA appealed to the High Court, Commercial Division, and we won again. We demanded a refund, but URA delayed, and the money grew significantly,” said Barungi.

MPs were outraged by the deal struck between URA and NHIL, which resulted in a loss of Shs7.77Bn, 69% of the initial amount. Barungi revealed plans to address the matter with the Attorney General to mitigate the loss.

The scrutiny was halted when Richard Muhumuza, Bwamba County MP expressed reservations about COSASE proceeding without the attendance of Uganda Development Corporation (UDC), which holds the vote for NHIL.

Muhumuza stated, “I am hesitant to raise audit issues without their accounting officer present. Nile Hotel is a subsidiary of UDC, and the accounting officer should be from UDC.”

Meanwhile, Workers’ Representative Charles Bakabulindi  supported this view, emphasizing the need for the accounting officer’s presence. Barungi, however, argued for the meeting to proceed, stating that NHIL was responsible for its operations and responses to audit issues.

Allan Mayanja, Vice Chairperson COSASE, ruled to halt the meeting until UDC was in attendance, citing the Public Finance Management Act 2015, which mandates accounting officers to account for allocated funds.

The Auditor General also criticized NHIL for failing to transfer land ownership to the company’s registry, despite investing UGX11Bn in Igongo Country Hotel and Cultural Centre.

Barungi defended the investment, highlighting Igongo’s cultural significance and tourism potential. “Igongo is not just a hotel but a tourist destination, which is why Nile Hotel partnered with them,” he said.

Barungi acknowledged the findings but blamed the oversight on the tedious process of acquiring land titles. He dismissed reports that NHIL had lost control over the land titles of the two hotels.

“The land title is in our custody, safe and secure. We ensure due diligence every two years to verify its status,” he explained.

NHIL, as the overseer of the government’s interests in Kampala Serena Hotel, provided an update on the 30-year concession, stating that the two parties have so far completed 20 years, with the concession set to end in 2034.

Barungi noted that NHIL has started recording profits and has remitted Shs4Bn in dividends to the government. “Nile Hotel is now profitable. From 2004, we started making profits and cleared previous losses. Even during the Covid-19 period, we were still making money,” he said.