UGANDA – Uganda’s Ministry of Trade, Industry, and Cooperatives has ordered the closure of CN Sugar Ltd, accusing the company of failing to establish the required nucleus estate before setting up its factory.
In a letter dated June 17, Trade Minister Francis Mwebesa indicated that CN Sugar Ltd only established 121 hectares of sugarcane plantation, significantly short of the mandated 500 hectares.
“Reference is made to your application to establish a sugar mill in Namyingo dated September 30, 2022, and a no-objection letter was issued to you on November 9, 2022, with a condition that you establish a nucleus estate of about 500 hectares,” the letter read. “But during the verification exercise, it was discovered that only 121 hectares were established.”
Consequently, the minister stated that CN Sugar Ltd’s certificate to set up the factory has been revoked.
Mwebesa advised the company to find alternative land outside the Busoga Sub-region to establish the required nucleus estate and submit the details to the ministry.
In response, CN Sugar Ltd’s Manager, Rashid Kakungulu said: “We have brought 1,300 acres because they told us to buy land yet they only need 1,250 acres. At the site, we have 300 acres of sugarcane, and in the field, we have planted sugarcane on about 650 acres.”
He urged the government to consider the significant investments already made in the factory, which is 40 percent complete, with US$6 million invested so far. He argued that unless the government compensates the investors with US$15 million, the company will not vacate the area.
“The minister gave us a license, authorizing us to construct the stores, staff quarters, perimeter walls, and canteen. The outgrowers have spent a lot of money planting sugarcane but the license has been revoked by the same minister,” he added.
Earlier this year, the Uganda Sugar Manufacturers Association (USMA) called for the closure of Shakti Sugar and Bon Sugar Mill Ltd (CN Sugar Ltd) for allegedly violating the Sugar Policy.
USMA argued that the proximity of these new mills to existing ones violated the policy guidelines, which aim to prevent instability in the sugar industry by controlling the number of mills in close proximity to each other.
Since the implementation of the Sugar Act in April 2020, the Ministry of Trade has licensed seven new millers in the Busoga sub-region, including Shakti Sugar Limited and Bon Sugar Limited.
The Sugar Act aims to regulate the industry by introducing zoning, which prevents the establishment of mills within a 25-km radius of each other and restricts outgrowers to supplying cane only to mills within that radius.
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