Bujagali power project
MPs have discovered that at the time the Government of Uganda contracted Bujagali Electricity Ltd was contracted in 2004, the company wasn’t allegedly registered.
Lawmakers say the company’s certificate of incorporation indicates that the company was registered the following year in 2005.
The queries were raised by Muwanga Kivumbi (Butambala County) who questioned a statement during a meeting held between Ministry of Finance and MPs of Parliament’s Ad hoc Committee that is investigating the 15year tax exemption awarded to Bujagali Electricity Limited.
In his statement, Henry Musasizi, State Minister for Finance (General Duties) said that in 2004, Government procured Bujagali Energy Limited through a competitive tender process to undertake the development of the 250 MW Bujagali Hydro Electric Power Project.
This prompted Muwanga to task the Minister to clarify on the legal standing of the company contracted due to the confusion in dates of contracting and the company’s year of incorporation.
“I have looked at the certificate of incorporation in this file, it is 2005, how did you enter a competitive bidding processing with a company that doesn’t exist. Before we dispose of that, the rest of the transactions were factious,” said Muwanga.
Moses Kaggwa, Director Economic Affairs at the Ministry of Finance promised to clarify on the matter replying, “When we started negotiating, we started with a consortium started earlier. That is why we are saying that we are going to confirm the date. Because the time you are talking about which is 2004 could be the time we started looking for a contractor.”
However, Dickson Kateshumbwa pointed out that even the articles of memorandum indicate that Bujagali was incorporated in 2005, a a year after receiving the multi-billion contract from Uganda.
In May 2022, Speaker Among put in place the Ad hoc Committee after Parliament rejected the request to extend another 5year tax exemption to Bujagali, and instead agreed on one year exemption so as to allow Government to conduct a forensic audit into the earlier 15years tax exemption the company had benefitted from Government.
This followed a proposal made by Minister Musasizi, seeking amendment to the Income Tax Amendment Bill 2022, to amend section 21 of the Income Tax Act to extend the income tax exemption for Bujagali Hydro Power Project from 1st July 2022 to 30th June 2027.
However, the proposal was rejected in part with MPs demanding Government to undertake a comprehensive study on the cost benefits of tax exemptions, after realizing that in 2021/2022 tax exemptions cost Uganda Shs7.7Trn in revenue and in five years, Government has lost Shs21Trn to tax exemptions.
In the certificate of financial implication submitted to Parliament to accompany the Income Tax Amendment Bill 2022, it indicates that revenue loss expected from the Bill is estimated to be Shs48.8112 billion annually, bringing the loss to over Shs250bn.
