Comparison between expenditures and revenues

Published:

Introduction:

On the 25th August 2009 the Director of Finance reported to the DG on the issue of budget deficit due to a number of factors. The Director of Finance mentioned among other things is the non availability of budgeted funds to be provided by external donor on one hand and unpaid regulatory fees from public owned utilities on the other hand, namely ELECTOGAZ, ONATRACOM and ORINFOR.

The Director General appointed a team made up of the Director of Finance, the Director of Economic Affairs, the Internal Auditor and the Director of Human Resource and Administration to discuss on the issues and to come up with strategies to get out of the situation and set up strategies to collect contributions.

Deliberations.

The ad hoc committee held three meetings; on the 26th August, 31st August and 9th September 2009 to discuss the issue. After analysis, it was realised that the main problem lies on the following factors:

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Public owned institutions are not paying their contributions as per provisions of the law, these include ELECTROGAZ, ORINFOR and ONATACOM.

Other operators are experiencing difficulties to pay their outstanding invoices, especially broad castors.

It has been reported to the committee that Bralirwa has shown some resistance to pay its VISAT fee contesting the way in which the new tariff set up by the Board of RURA has been communicated to it.

In consideration of the above, the ad hoc team decided to revisit the budget by reviewing the real cash flow expectation in comparison with the budgeted expenditures for the remaining months of the year from September to December 2009 as follow:

In line with the mandate set by the Director General agreed to identify the factors underlying that budget deficit through comparison of budgeted amount with the status of revenue collected.

Revenue collection analysis.

Under this chapter, the team considered the status of payments received in comparison with the budgeted revenues as per the following tables 1 and 2.

Income progress report

The situation of payments received as per budgeted is summarized in the hereafter table.

Table 1: Income progress report as at 31st august 2009 as registered in accounting section.

Expected Income

Received

Difference

variation in %

Internally generated revenues

2,897,980,573

2,137,099,408

-760,881,165

73.74%

Operator's contributions (1%)

1,564,864,614

810,293,129

754,571,485

51.78%

 

 

 

 

 

MTN Rwandacell

629,546,004

649,546,668

-20,000,664

103.18%

 

 

 

 

 

Rwandatél

200,000,000

93,357,868

106,642,132

46.68%

 

 

 

 

 

ISPA

1,200,000

0

0

0.00%

 

 

 

 

 

STAR MEDIA

781,796

1,437,505

-655,709

183.87%

 

 

 

 

 

TELE 10

2,832,704

6,550,821

-3,718,117

231.26%

 

 

 

 

 

ALTECH

104,293

104,293

0

100.00%

 

 

 

 

 

NEW ARTEL

20,522,639

7,179,990

13,342,649

34.99%

 

 

 

 

 

ELECTROGAZ

326,830,639

0

326,830,639

0.00%

 

 

 

 

 

ELGZ outstandings

228,904,951

29,930,716

198,974,235

13.08%

 

 

 

 

 

ONATRACOM

54,141,588

0

54,141,588

0.00%

 

 

 

 

 

Other Transport operators

100,000,000

22,185,268

77,814,732

22.19%

 

 

 

 

 

Other regulatory fees

950,000,000

937,220,047

12,779,953

98.65%

 

 

 

 

 

Frequencies allocations

750,000,000

612,456,160

137,543,840

81.66%

 

 

 

 

 

Numbering fees

150,000,000

110,935,530

39,064,470

73.96%

 

 

 

 

 

Transport licences

50,000,000

213,828,357

-163,828,357

427.66%

 

 

 

 

 

Other Income

0

6,470,273

-6,470,273

 

 

 

 

 

 

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Balance account at 31december,2008

383,115,959

383,115,959

 

 

External Funds

1,102,950,000

25,180,320

1,077,769,680

2.28%

 

 

 

 

 

eRwanda

456,000,000

0

456,000,000

0.00%

 

 

 

 

 

RCIP

456,000,000

0

456,000,000

0.00%

 

 

 

 

 

UERP

85,500,000

0

85,500,000

0.00%

 

 

 

 

 

ICF

105,450,000

25,180,320

80,269,680

23.88%

 

 

 

 

 

TOTAL REVENUE

4,000,930,573

2,162,279,728

1,838,650,845

54.04%

The table above illustrates that:

The table above have tree components

1% contribution of turnover:

Other regulatory fees

Extenal funds

The above table shows 51.78% performance in correction of 1% regulatory fees.

The many factors identified for that low % is due to:

Overestimation of regulatory fees of Rwandatel,

None payment from ELECTROGAZ,

Concerning other regulatory fees the table shows the good performance of 98.65%. Under this item, it was noted that the amount from transport licence was mote that 4 times than expected. This stems from the underestimation of the numbers of transport operators at the beginning of the year. However it was observed that under the some item, there was issues related to the frequency fees due to some disputed invoices and none payment of broad castors

External Funds: The external fund represent 27.5% of the total RURA budget, but the table shows the very low performance of 2.28% as at 31st August. However there is indication that this performance might improve significantly during the remaining period September to December.

From the above different performance rate, it is observed that the average performance rate was fund to be 54.04%.

Considering the above difference between the expected based on formal commitments from the concerned operators and received amount, the team found it necessary to assess the exact amount that RURA can expect to receive and the budgeted expenditures for the remaining period (Sept. to Dec. 2009)

Expected revenues

With respect to expected revenues, the following table 3 was prepared based on estimates provided by the directorate of economic regulation.

Table 2: expected revenues for the period of September - December 2009

Transport

6,746,800

ICT

78,867,619

ELECTROGAZ

265830089 [1] 

Sub Total

351444508

External fund

349,364,940 RWF

Total

700,809,448 RWF

Source: Directorate of Economic Regulation and HRA

The above tables show that the projected receivable amount of regulatory fees for the period from September to December 2009 is Rwf. 700,809,448 RWF out of Rwf. 1,838,650,845 or 38 %.

By comparing, The above figures with the budget expenditure, for the remainder year we determine the financing gap on the following section.

Expenditure analysis

Table 3: Situation of expenditures as planned, executed and proposal for the period September to

December 2009.

Items

Budgeted

Executed

Remains

Proposed

Observation

 

 

 

 

 

 

Employees charges

2,649,058,721

1,240,239,096

1,408,819,625

909,732,265

The amount was over estimated,

 

 

 

 

 

 

Fuel

5,000,000

0

5,000,000

0

We propose to remove this item; there is no need of fuel in RURA.

Office stationeries & Consumables

30,000,000

17,961,397

12,038,603

12,038,600

 

Cleaning, maintenance& repair

20,000,000

14,624,852

5,375,148

12,261,603

We propose to increase the amount as the number of cleaners has also increased

Beverages, tea and coffee

17,500,000

1,946,616

15,553,384

600,000

This was provided to Directors only while it was budgeted for all staff

 

 

 

 

 

Proposed amount is enough

ICT consumables

14,327,500

1,921,700

12,405,800

 

 

Subscription to news paper

1,000,000

1,009,185

-9,185

10,000

We propose to increase in order to cover amount exceeded.

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Maintenance of equipments

7,500,000

1,310,300

6,189,700

6,189,700

 

Local perdiems & accomodation

58,046,000

7,238,496

50,807,504

8,000,000

This amount was over estimated by some Directors, the entire budgeted could not be used.

Car hire

70,891,400

21,810,444

49,080,956

9,993,468

The amount was also over estimated, the main cause is the review of the rates of accommodation.

International Travelling DG

3,500,000

2,975,980

524,020

2,096,080

We proposed to increase as budgeted amount is almost finished.

International Travelling HRA

15,000,000

13,367,401

1,632,599

1,632,599

 

Communication costs

35,500,000

17,253,776

18,246,224

4,208,000

This amount should be reduced based on amount executed.

Acquisition of books.

10,000,000

84,932

9,915,068

9,915,068

 

Water & Electricity consumption

25,000,000

6,428,837

18,571,163

8,000,000

According to monthly consumption, total amount remained will not be consumed.

Security charges

7,500,000

2,580,200

4,919,800

7,000,000

There is tender in process.

Marketing& Publicity

28,000,000

13,938,148

14,061,852

7,000,000

This amount will be enough for remained period based on budget execution data.

Consultancy

89,707,992

15,485,720

74,222,272

74,222,272

 

Training costs

 

 

 

 

 

Training supported by RURA budget

558,266,050

275,039,556

283,226,494

60,000,000

Taking into consideration cash problems, training cost should be slowed down

Training supported by RCIP

 

 

185,250,000

185,250,000

allow those pending( in process) only for the rest of the year.

Training supported by ICF

 

 

139,869,940

139,869,940

For the case of donors, they accepted to refund only the balance mentioned.

Training supported by UERP

 

 

24,245,000

24,245,000

 

International perdiems HRA

15,000,000

14,189,012

810,988

2,371,320

We propose to decrease the amount for a remained month as budgeted is almost finished.

International perdiems DG

15,000,000

14,586,196

413,804

1,413,805

This item was highly consumed and we would propose to be reduce for the remained months.

Office rent( Kimihurura)

80,720,000

42,441,697

38,278,303

45,000,000

This amount will be enough for remained months.

Other contingencies & emergencies

10,000,000

9,970,970

29,030

29,030

We hope not to have other contingencies and emergences for remained period.

Membership fees to international orgs

31,500,000

8,367,512

23,132,488

9,500,000

This amount was over estimated and should be reduced based on previous execution.

Audit &advisory costs

8,500,000

727,950

7,772,050

3,886,025

Only half of it will be enough based on budget execution.

Sports clothes

 

 

 

15,000,000

This amount is expected to be paid for sports clothes.

Translation cost

7,500,000

3,379,354

4,120,646

4,120,646

 

Survey

40,000,000

15,925,292

24,074,708

24,074,708

 

Meeting and hiring conf.room

28,550,000

4,475,292

24,074,708

12,000,000

This amount has been overestimated and only half of it will be enough

Seating allowances

6,500,000

2,171,600

4,328,400

2,080,000

 

Refreshments DG's office

3,600,000

291,300

3,308,700

3,308,700

 

Announcements& Emission

40,580,000

10,585,960

29,994,040

8,000,000

This amount was over estimated by Directorates and can be reduced.

Workshops,seminars and conference

75,182,910

66,604,070

8,578,840

8,578,840

 

Total debt to be paid to UAF

 

 

 

243,417,429

This amount is to be paid by RURA to UAF.

Total

4,008,430,573

1,848,932,841

2,508,862,672

1,865,045,098

 

Source: DF directorate, budget section.

5. Determination of Financing Gap

The above budgeted expenditures of Rwf. 1,865,045,098 and the expected revenues of RWF 251,557,248 for the remaining months show a deficit of Rwf. 1,613,487,850. If we assume that pledges from donors will be honored, we can reduce the deficit to a total of 1,613,487,850 minus 349,364,940 or RWF 1,264,122,910. This is the financing gap to be bridged by RURA for it to be able to achieve its objectives of the year 2009.

In addition to this, it is reasonable to say that a provision of security margin of three months for the 1st quarter 2010 in which RURA will be waiting for the first operators' disbursement of their regulatory contributions needs to be taken into consideration if we are to avoid any insolvency problem.

conclusion and recommendations.

Based on the above assessment of the RURA financial situation, the team suggested the following measures to be taken in order to secure the budget:

5.1 On short term basis............

5.2. On long term basis…….

Annexes:

Annex 1…

Annex 2…

Team members.

RUTAYISIRE S. Innocent, Director of Finance, Chairman

MVUYIKONGO J. Claude, Director of Economic Regulation, member

Kayira Sadock, Ag Director of HRA, member

Marthe UWAMARIYA, Internal Auditor, member.