Amina Moghe Hersi, the CEO of Atiak Sugar Factory
Government has asked Parliament to approve the injection of Shs274.11Bn into controversial Atiak Sugar Factory so as to save the company from being taken over by Equity Bank.
Government says this will resuscitate the company that ceased its operations in April 2022.
The request was contained in a supplementary request by Uganda Development Corporation (UDC) seeking for an additional funding of Shs274.11Bn into Horyal Investment Holding Limited that is managing Atiak Sugar Factory, as part of the preparations for the factory to resume operations in 2024.
While presenting the report by the Trade Committee, before Parliament’s Budget Committee, Alfred Edakasi, urged the Budget Committee not to approve the supplementary funding to Atiak on grounds that government fulfilled its objective in the first phase of investment.
“Whereas Government should have already stopped funding the Atiak Sugar Factory considering it already met its objective of 1,650 tonnes of cane crushed per day was commissioned as per shareholder agreement. Government should not spend on or invest any more money in the project. Consequently, the Shs274.11bn, meant to acquire preferential shares in Horyal Holdings Investments Limited should not be approved,” remarked Edakasi.
This prompted Ssemujju Nganda (Kira Municipality) to ask the Trade Committee, “The initial investment in this company, what percentage of shareholding did it give us and if we contributed Shs201bn, what was the corresponding financial investment by our partners in this business and if the request to give them another Shs274bn, what percentage of shareholding did that represent and what percentage of financial investment did the other partners put into this company?”
Edakasi informed the Budget Committee that Government’s first investment in Atiak came through UDC that injected Shs80.1bn as equity investment for the purchase of 40% shares in the factory, and later extended a loan to the company to a tune of Shs20.5bn which loan is still within its grace period.
UDC yet again sunk Shs108bn in Atiak for acquisition of mechanization, another Shs274.11bn was gifted to Atiak for purchase of preference shares, and this was also backed by another Shs16bn as transport subsidy.
This was further backed by Shs65.1bn that NAADS spent on payment of sugarcane out growers, thus bringing total government investment to Shs563.22bn.
However, despite Government injecting Shs563.22Bn into the company, Amina Moghe Hersi, the CEO of Atiak Sugar Factory on her part has only injected in Shs121.314Bn and commands 60% shares, while Government has only 40% shares.
However, Government is on the brink of losing all this investment because Amina used her 60% shares to acquire a loan from Equity Bank and Atiak is now being held as security with potential of being sold off. This has prompted Government to spend an additional Shs274.11bn.
Edakasi said, “This would result into a loss to Government considering the amount of investment made into the company through UDC and NAADS. In addition, the project requires urgent construction of accommodation facilities to house at least 1,300 labourers.”
So far, UDC has paid the Shs200Bn to Horyal Investment Holding Limited through Ecobank and partial payment has been made to Equity Bank, but the 60% shareholding held as security is yet to be released to UDC.