Published on 11/02/2025
Dr. Silver Mugisha, Managing Director of National Water and Sewerage Corporation (NWSC), urged lawmakers to amend the Value Added Tax (VAT) Act, enabling the corporation to offset its tax obligations with URA. He argued that this change would ease financial strain and improve service delivery.
According to Mugisha, swapping the corporation’s VAT to the revenue body means that the water body will have the flexibility to decide that a government entity that owes NWSC budgets less than what it consumes, the over consumption will be swapped with the corporation’s VAT obligation.
Mugisha made the proposals while appearing before the joint Committees of Natural Resources and Finance on Tuesday, 11 February 2025. He was presenting a petition on unpaid arrears by several government entities.
He revealed that 36 entities including hospitals, Prime Minister’s office, Ministry of Defence and Veteran Affairs, Uganda Prisons and Uganda Police Force owe the corporation over Shs100 billion.
The water company wants Parliament to authorise adoption of the policy of VAT invoiced and deemed paid, through which NWSC will swap its VAT obligations to URA against the arrears owed by the government entities.
“This will imply that whenever the NWSC monthly obligations exceed the outstanding government arrears to NWSC, then NWSC will remit any excess VAT that is due to URA,” he said.
He explained that to operationalise the policy, Parliament is required to amend Section 31(2) of the VAT Act.
Mugisha said that the decision to petition Parliament comes after failed attempts to get funds from the Ministry of Finance, Planning and Economic Development, despite a presidential directive instructing the Finance Ministry to settle the arrears.
The Chairperson of the Committee on Natural Resources, Hon. Herbert Ariko underscored the urgency of settling the arrears saying that NWSC is not only one of the profitable government bodies but also provides the most important services.
“Why is it that the only healthy business entity of government has reached a point where they have failed to manage operations? We take cognizance of this and it is important that the matter is addressed with the merits that it deserves,” Ariko said.
Kumi District Woman Member of Parliament, Hon. Christine Apolot welcomed the proposal to amend the VAT Act but suggested that a supplementary budget should be considered, saying that water is a necessity and NWSC should be supported to provide the services.
“We need to engage both the Finance and Budget Committees because most times we come up with priorities but in the end the Budget Committee cuts,” she said.
Hon. Ignatius Wamakuyu (NRM, Elgon County) encouraged the water body to consider introducing pre-paid meters, saying that this could solve the challenge of arrears.
Mugisha however, said that pre-paid meters will not solve the challenge, as long as the entities continue being under funded.
“If you put a pre-paid meter in Mulago Hospital and the water is cut off, what happens to the patients? I cannot disconnect Mulago Hospital because of what it is,” said Mugisha.
