An Ad hoc committee of Parliament has unveiled inconsistencies in the ownership and registration of Bujagali Energy Ltd, the company that owns and operates a 250MW hydropower plant on the River Nile.
The power plant was commissioned in 2012 and has been supplying energy to the Ugandan grid. But the committee learnt that the company won a multi-billion contract before it was even registered and that the original owners of the projects forfeited their shares when the company was incorporated.
The matter resurfaced on Thursday when Josephine Ossiya, the Head of Finance and Administration at Bujagali Energy Limited together with the General Manager Alaister McDougall appeared before the commitee which is investigating the irregularities in the hydropower project as raised by the Auditor General’s report for the 2020/2021 financial year.
The Committee seeks to ascertain the Government of Uganda’s equity contribution on Bujagali, return on investments, the cost-benefit and value for money for the income tax exemption overtime among others.
Sheema Municipality Member of Parliament Dickson Kateshumbwa raised a query after Ossiya, said that the company was incorporated in August 2005, yet records show that the same company was contracted in 2004 by the government.
But McDougall informed the committee that the current team is new and has little information about how the company was formed. However, his defence prompted Otuke County MP Paul Omara to question how a General Manager can take up office without accessing such information.
The committee also learnt that Bujagali Energy Limited was formed by two individuals Ebert Byenkya and Innocent Kihika each injecting one million Shillings. But the duo forfeited their shares after the company was incorporated.
The revelation attracted questions from MPs on how a two million Shillings company came to win a multi-billion contract and the government’s basis to invest USD 20 million (77.2 billion Shillings) in the same. The Bujagali officials failed to explain the controversies prompting the Kateshumbwa who was chairing to adjourn the meeting.
In May 2022, the Speaker of Parliament Anita Among set up an Ad hoc Committee after Parliament rejected the request to extend the five-year tax exemption to the company and instead agreed on a one-year exemption so as to allow the government to conduct a forensic audit into the earlier 15-years’ tax exemption.
This followed a proposal by State Minister for Finance, Hon. Henry Musasizi, to extend the income tax exemption for Bujagali Hydro Power Project from July 1, 2022, to June 20, 2027.
The proposal was rejected in part with MPs demanding that government undertakes a comprehensive study on the cost benefits of tax exemptions, after realizing that in 2021/2022 tax exemptions cost Uganda 7.7 Shillings trillion in revenue.