Lawmakers on Parliament’s Finance Committee have castigated officials for Ministry of Finance for misleading President Museveni that Parliament was still discussing subject of tax waiver to Bujagali Hydroelectricity Plant, saying Parliament made a decision not to extend another tax waiver to the company.
While appearing before the Committee, Henry Musasizi, Minister of State for Finance (General Duties) defended the proposal to insert a new clause in the Income Amendment Bill 2023, to extend Bujagali’s tax waiver for another year in order to allow Parliament’s Ad hoc Committee on Bujagali to complete its work, an assertion that was rejected by MPs who said there was no decision left to reconsider about the matter.
The Minister said, “The waiver of Corporate Income Tax was one of the strategies negotiated by Bujagali to reduce the power tariffs. Since the Parliament Ad hoc Committee hasn’t finalised the work, we recommend that we exempt the income of Bujagali for one year, pending finalisation of the Committee work. The purpose of this amendment is to reduce the average electricity tariff of Bujagali Hydro power project by 4.7%.”
However, Dickson Kateshumbwa (Sheema Municipality), who was also Chairperson Ad hoc Committee on Bujagali protested the statements made by Minister Musasizi noting, “The Minister needs to withdraw his statement because what you are saying isn’t what you put here, because you are indicting Parliament.”
He was backed by Herbert Tayebwa (Kashongi County) who called out the Minister for misleading the President saying there is no need for Parliament to revise its earlier decision on not extending Bujagali tax waiver because the decision was final.
“It is unfortunate that the President was told the Ad hoc Committee is still working, the Ad hoc Committee finished its work. We said the waiver should stop I even don’t understand what we are going to do. When we were investigating as ad hoc committee we virtually involved all these people here and whatever we came up with was virtually from their meetings and discussions, our recommendations were clearly as a result of what we had gathered,” said Tayebwa.
He added, “I don’t understand when the President says we need to go back and investigate what? Because we recommended not to extend any more waiver and made more other recommendations including the haemorrhage that Bujagali has caused this country. I don’t understand, what else are we going to do with this issue?”
The Minister in response admitted to being aware of the fact that Parliament finished its work, saying that the Ministry intended to write that the work completed by the Ad hoc Committee awaits implementation of an audit as recommended by Parliament, which audit is yet to be conducted.
Musasizi said, “Evidence indicates that most mutli-national enterprises engage in aggressive tax planning practices so as to minimise their tax burden. You are aware that the basis for Parliament’s rejection. I want to withdraw the statement that I made in regard that the committee hasn’t finished its work. This statement stands withdrawn from my statement.”
It should be recalled that in March 2023, Parliament rejected the request by Ministry of Finance, to gift Bujagali Energy Limited another five years tax waiver, until the Company refunds US$342,198,189 about (Shs1.280Trn) it received in excess power tariffs from Ugandan taxpayers, through the fictitious tariffs computation methods it gave to Government, upon which payment was made.
The latest development follows a letter authored by President Museveni asking Parliament to grant Bujagali Hydroelectric Plant another year tax waiver to allow both Auditor General and the company to harmonise, on recommendations made in Parliament’s Ad hoc Committee.
The President wrote, “A clause should be incorporated to provide for an extension of one year of corporate tax waiver for Bujagali Hydroelectric Plant. Whereas I am aware of an ad hoc Committee which parliament put in place to investigate on Bujagali Tax waiver, the waiver of the corporate income tax was one that government put in place to reduce on the generation of tariffs payable by Bujagali, hence leading to a reduction of electricity end user’s tariff.”
Museveni hinged his defence on a report he said that during the period of 2018 to 2022, the corporate tax income waiver on Bujagali reduced their tariff from US Cent 13.83 per KW, to US Cent 10.62 per KW noting, “The reduction in power tariffs, has led to industrialisation although there is still need to have it lowered further. Therefore, the corporate income tax waiver for Bujagali Hydroelectric plant should be reinstated for one year as the ad hoc committee and audit committee does its work.”
