The Government of Uganda is seeking Shs20bn loan approval from Parliament to inject it in Horyal Investment Holding Company Limited owned by tycoon Amina Moghe Hersi of Oasis Mall.
After becoming financially distressed, Hersi thought to have a joint venture with the government to establish a US$50 million sugar factory in Atiak Sub-County, Kilak County, in Amuru District.
The Minister of Trade, Industry and Cooperatives Amelia Kyambadde tabled the supplementary budget request before the parliamentary Budget Committee chaired by Elgon County MP, Wamakuyu Mudimi on Wednesday.
Kyambadde revealed that the Shs20bn investment in the sugar factory will make government have 10% shareholding (translated into 2, 020,000 shares).
The decision to invest in the company was reached at after a meeting on the July6, 2017 between Horyal Investment Holding Company Limited. Chaired by President Yoweri Museveni, government agreed to acquire equity in the company at US$5.2m (about Shs20bn).
The payback period for this loan is expected to mature in seven years.
However, MPs sitting on the Budget Committee noted that government used bad negotiators for this investment to have only 10% shareholding which could have been more since this company is in financial distress, with heavy debts from a number financial institutions including dfcu.
Ntenjeru North MP, Amos Lugolobi said that the government contribution was heavily undervalued, adding that they cannot buy shares in a company which is under distress at the value which could have bought a company which is already making profit.
He said that the government will not influence the management of this business with only 10% shares.
He stated that this decision rendered this project expensive and not viable since the cost of investment is too high.
Kyambadde said that required funds should be approved as the government moves on to renegotiate other terms which include having more shares for this investment.
Atiak sugar factory is expected to employ over 3000 Ugandans and its by-products produce 6MW of electricity in phase1.