Uganda’s High Court voids sugar mill licenses issued since 2010, orders constitution of sugar board 

UGANDA – The High Court of Uganda has declared all licenses issued by the Ministry of Trade, Industry, and Cooperatives (MTIC) to sugar and jaggery mills since 2010 null and void.  

The ruling follows a petition filed by the Uganda Sugar Manufacturers Association (USMA) against the Attorney General, the minister of Trade, Industry, and Cooperatives, CN Sugar Limited, and Shakti Sugar Limited. 

USMA, representing Uganda’s major sugar manufacturers, argued that the Ministry of Trade’s issuance of licenses to CN Sugar Limited and Shakti Sugar Limited violated the Sugar Act.  

According to the Act, licenses for sugar and jaggery mills must be issued by the Uganda Sugar Board (USB), an entity that the government has failed to establish since the Act’s enactment.  

The court ruled that the ministry’s failure to establish the USB constituted a breach of statutory duty under Section 4 of the Sugar Act. Justice Musa Ssekaana noted that the absence of a USB undermines the regulatory framework necessary for Uganda’s sugar industry. 

The defendants attempted to justify their operations. CN Sugar’s director, Petel Namit, claimed his company had invested US$35 million in reliance on the Sugar Policy of 2010 and assurances from the regulatory authority under the Ministry of Finance. Namit argued that this investment was made in good faith, expecting to engage in sugar-related activities. 

Similarly, Shakti Sugar, represented by Patel Ravikumar Ramalal, cited the National Sugar Policy of 2010, which provides for licenses for sugar factories with nucleus estates of at least 500 hectares.  

Ramalal further argued that Shakti had obtained a qualified foreign investment license from the Uganda Investment Authority (UIA) in November 2022.  

This license required compliance with regulations, including the National Environmental Act, Investment Code Act, and district health standards. 

However, acting commissioner Denis Ainebyona, representing the Attorney General and MTIC, clarified that CN Sugar and Shakti Sugar had not established fully operational sugar mills but merely nucleus estates and warehouses.  

He emphasized that nucleus estates are only preparatory steps and do not constitute licenses under the Sugar Act. 

The court also found that the establishment of CN and Shakti Sugar mills within a 25-kilometer radius of existing mills violated government policy.  

Additionally, the court noted that Local Council One (LC I) chairpersons had issued Letters of No Objection (LONOs) to the companies, which were then used to obtain licenses from the ministry.  

However, the court ruled that these LONOs were not a legal substitute for the licenses mandated by law. 

As part of the ruling, the court ordered CN Sugar and Shakti Sugar to immediately cease all operations at their sugar and jaggery mills until properly licensed by a competent authority. 

Furthermore, a mandamus order was issued to the MTIC, directing it to constitute the USB within three months in accordance with Section 4 of the Sugar Act. 

The court also directed the Inspector General of Police (IGP) to remove all sugar and jaggery mills operated by CN Sugar and Shakti Sugar from the prohibited zones under Section 19 of the Sugar Act within 14 days of the ruling. 

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