Wednesday, September 19, 2018
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Local Plastics Company Collapses Over High Power Tariffs, Taxes

A local manufacturing company, Kanoni Plastic Works has closed shop citing high power tariffs and taxes, URN reports.

Kanoni plastic works, which is locked in Kanoni Town Council in Gomba District, started operating in 2009.

The company has been producing a number of plastic items including basins, cups, and buckets among others. However, the company has since ceased production over accumulated power bills.

Recently, the Electricity Regulatory Authority-ERA set new power tariffs where domestic, commercial, medium and large industrial consumers have to pay on average Shillings 31 more for the power consumed.

It’s only extra-large industrial consumers whose retail tariff was decreased by Shillings 55.4 on account of rolling out the benefit of refinancing Bujagali hydropower plant.

Isma Golooba, the Director Kanoni Plastic Works Company, says besides the high power tariffs, the power supply is very unstable.

Uganda Manufacturers Association, whose members consume about 70 percent of the power produced in the country, has repeatedly complained about the high power tariffs, which pushed up the production cost.

President, Yoweri Museveni has promised to ensure the power tariffs drop once the 600MW Karuma power dam and the 185MW Isimba dam are complete.

Golooba says at the inception of their business they used to import high quality raw materials known but the taxes went up forcing them to stop importing it, which has affected the quality of their products.

Golooba says they have tried to reach out to government for support but their efforts are yet to yield results. He says instead of offering a conducive working environment for Ugandan companies, the government taxes them heavily yet some of them are operating on heavy loans.

Fred Kuteesa, the Kanoni Town Chairperson, notes that closure of the factory has shuttered the dreams of more than 70 workers and youths in the area who have been collecting plastic material for recycling at the factory.

“Many youths have been earning a living from the plastics which they collect and sell to the factory. They have been keeping busy in several towns looking for this material and now that the factory is closed they are going to start loitering in town,” says Kuteesa.

According to a business climate index released by Makerere’s Economic Policy Research Centre (EPRC), many small and the medium businesses in Uganda are constrained by high Electricity Tariffs and Macroeconomics factors including high bank interest and exchange rates.

 

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