UGANDA – The Government of Uganda wants the country’s parliament to save the controversial Atiak Sugar Factory from being taken over or sold off by Equity Bank, through the approval of Shs274.11Bn (US$72.9m) that would be used to repay loans.
According to the government, the budget contained in a supplementary request by Uganda Development Corporation (UDC) will resuscitate the company that ceased its operations in April 2022.
The additional funding of Shs274.11Bn is to be deposited into Horyal Investment Holding Limited, which is managing Atiak Sugar Factory, as part of the preparations for the factory to resume operations in 2024.
The report by the country’s Trade Committee received a backlash, as Alfred Edakasi, urged the Budget Committee not to approve the supplementary funding to Atiak on grounds that the government fulfilled its objective in the first phase of investment.
“Whereas Government should have already stopped funding the Atiak Sugar Factory, considering it already met its objective of 1,650 tonnes of cane crushed per day commissioned as per shareholder agreement. Government should not spend or invest any more money in the project.
“Consequently, the Shs274.11bn, meant to acquire preferential shares in Horyal Holdings Investments Limited, should not be approved,” remarked Edakasi.
Edakasi informed the Budget Committee that Government’s first investment in Atiak came through UDC injected Shs80.1bn as an equity investment for the purchase of 40% shares in the factory, and later extended a loan to the company to the tune of Shs20.5bn which loan is still within its grace period.
Despite the Government injecting Shs563.22Bn into the company, Amina Moghe Hersi, the CEO of Atiak Sugar Factory, on her part has only injected in Shs121.314Bn,commanding 60% shares, while government has only 40% shares.
Because Amina used her 60% shares to acquire a loan from Equity Bank and Atiak is now being held as security with the potential of being sold off, the Government is on the brink of losing all this investment, Endakasi noted.
The investment, according to him, is not sound, as the project also requires urgent construction of accommodation facilities to house at least 1,300 laborers.
So far, UDC has paid the Shs200Bn to Horyal Investment Holding Limited through Ecobank and partial payment has been made to Equity Bank, but the 60% shareholding held as security is yet to be released to UDC.
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