Government to invest more sh24b in Atiak Sugar Factory

The Government is seeking parliamentary approval of sh24b additional funding to inject in Atiak Sugar Factory owned by businesswoman Amina Hersi Morghe.

Through a supplementary budget request by Government, Parliament last year

approved sh45b funding towards the takeoff of the factory, where the Government owns 32% shares. 

However, appearing before the parliamentary committee on tourism trade and industry, Patrick Burungi, the executive director of Uganda Development Corporation (UDC) told the MPs that the Government had decided to inject more money into the factory to help kick-start production, pending operational works.

"At the moment, the corporation, on behalf of the Government, holds up to 32% shareholding in this first large investment in post-conflict northern Uganda. With an additional sh24b, the shareholding will go up, commensurate with the value that will have been invested," Burungi told the committee. 

The corporation first appeared before the committee last week, seeking approval of the money contained in the ministerial policy statement for the 2019/20 financial year.

The committee, chaired by Nansana Municipality MP Robert Ssebunya, however, stayed the approval and asked the corporation to reappear before the committee on Tuesday, alongside Atiak Sugar Factory management to defend the supplementary funding. 

The corporation appeared before the committee with Atiak Sugar Factory management led by Daniel Kidega, the former speaker of the East African Legislative Assembly, also chairman board of directors at Atiak Sugar Factory.

Kidega was accompanied by Morghe and Abdi Mohamoud Mohammed, the director of Atiak Sugar Factory, among other senior officials. Mohamoud said the money is needed to complete pending works at the factory ahead of production in August. 

"The additional sh24b required is proposed to cater for the sh21.9b needed to construct the office block and staff housing as per the bill of quantities verified by the works and transport ministry.

This was not provided for in the ministerial policy statement for the 2018/19 financial year," Mohamoud told the MPs.

He explained that there were contractual penalties that accrued, resulting in an additional payment of sh2.2b. Mohamoud said the approval of the additional funding will see the Government acquire between 40 and 44% shares in the company. 

"With this last injection by the Government, this investment will be able to sustain its own cashflows. It shall work with no more government injection of equity and instead begin paying back dividends to the Government within two years," he said. Mohamoud told the MPs that the National Agricultural Advisory Services (NAADs) would also invest sh52b to help outgrowers to plant 28,841 acres of sugarcane.


Shares

The MPs, however, proposed that the Government considers enabling the local communities acquire shares in the factory when it fully stabilises. 

"Shareholding can be translated into ordinary shares, which can be acquired by outgrowers. UDC should encourage the ordinary people to own shares and trade comfortably so that they see this investment as their own," Mohammed Nsereko (Kampala Central) said.

Odonga Otto, the Aruu County MP, commended Horyal Investment for establishing Atiak Sugar Factory, one of the first factories in northern Uganda, saying it will help the people recover economically. 

The MPs resolved that the committee visits Atiak Sugar Factory to ascertain its impact before it can approve the additional funding. Morghe said the factory had already established market for sugar, adding that it already has market for 90,000 tonnes in Kenya.