Bujagali electricity project cheating Ugandans — MPs

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Members of Parliament (MPs) have raised concerns over the Bujagali Hydropower Project’s tax waiver, exposing alleged financial miscalculations and possible overcharging of Ugandans. 

The legislators, sitting on the House committee of finance chaired by Amos Kankunda (Rwampara County, NRM), questioned the basis for tariff computation and accused authorities of failing to hold investors accountable for unpaid taxes.

The MPs made the remarks during the appearance of the General Duties finance state minister Henry Musasizi, before the committee on February 18, 2025, to present the Income Tax (Amendment) Bill, 2025, and Excise Duty (Amendment) Bill, 2025.

General Duties finance state minister, Henry Musasizi. (File)

Officials from Bujagali Energy Limited (BEL) also appeared before the committee where the minister made the proposal for tax waiver for Bujagali Hydropower Project.

The heated discussions stemmed from the Auditor General’s report, which revealed discrepancies in tariff computation and uncollected taxes amounting to millions of dollars.

Tariff computation, uncollected taxes

MPs question the ministry and the Uganda Revenue Authority (URA) over the irregularities in the tariff computation, as well as uncollected taxes.

Herbert Tayebwa (Kashongi County, NRM) expressed disappointment with the report, citing serious irregularities in the way tariffs were computed.

“We computed and found that the tariff calculation was based on incorrect figures. The tax of $63m from interest between 2007 and 2012 was never collected by URA,” Tayebwa noted.

He further questioned why the Government had not acted to recover these funds despite clear evidence of miscalculation.

MPs also raised concerns about the management of preferential shares by Bujagali Energy Ltd, arguing that the redemption of these shares had led to financial losses for Uganda.

Nathan Nandala-Mafabi (Budadiri County West, FDC) stated that BEL had unfairly profited from Ugandans through questionable accounting practices.

“You cannot remove money from a balance sheet without making adjustments. It is criminal to redeem shares and continue charging Ugandans the same high tariffs,” Mafabi argued.

The legislators also accused Bujagali of double-charging Ugandans, with Mafabi emphasizing that BEL is earning significant profits at the expense of the ordinary citizen.

“They are getting a 19 per cent return on investment and still making extra profits. This is cheating Ugandans under the guise of investment,” he noted.

Shareholder dividends concerns

Xavier Kyooma (Ibanda North, NRM) raised concerns over whether shareholders continued receiving dividends even after redeeming shares.

He questioned whether the funds withdrawn from the project between 2013 and 2015 were being accounted for in the tariff structure.

“If they withdrew $169m during this period, did they keep earning returns as if nothing had changed? This is treacherous," Kyooma stated.

The debate also saw Agnes Atim Apea (Amolatar Woman MP, NRM) questioning the justification for continued tax waivers. Apea called for a comprehensive review of the calculations used to determine electricity tariffs for consumers.

“The minister must provide a clear analysis of the errors in tariff computation. We cannot approve waivers based on flawed reports,” she said.

A long-standing controversy

The Bujagali Hydropower Project, a 250MW facility commissioned in 2012, has long been a subject of controversy regarding its financial sustainability and cost to consumers.

While it was initially hailed as a solution to Uganda’s power shortages, concerns over its high tariffs and continued tax waivers sparked criticism from lawmakers.

MPs demanded that the Ministry of Finance and the Uganda Revenue Authority (URA) account for the revenue losses and ensure that investors in the energy sector operate with transparency and accountability.

The committee chairperson adjourned the meeting, noting that they will need to first meet the accountant general before another meeting with the finance minister together with URA to explain the cited irregularities.