----- Original Message ----- 
From: gook makanga 
To: [log in to unmask] 
Sent: Friday, February 06, 2004 11:32 PM
Subject: Govt in new 200bn scam


When shall all this thuggery end?

gook

Govt in new 200bn scam
By Daniel Kalinaki & Andrew M. Mwenda
Feb 7, 2004

      KAMPALA - Government has signed an agreement to guarantee a private vegetable-oil company, Bidco, a loan of Shs 200 billion (US$ 112m) without parliamentary approval. 

      The loan, which has a guarantee from the World Bank's Multilateral Investment Guarantee Agency (MIGA), needed a counter guarantee from government. According to Uganda's Constitution, government cannot take or guarantee a loan without approval of Parliament.

      The chairperson of the parliamentary committee on Finance, Maj. Bright Rwamirama, yesterday confirmed to The Monitor that government did not seek approval from his committee. 

      He said further that when his committee called the minister of Finance, Planning and Economic Development to explain the deal, on Thursday, he was unable to offer any explanation. 

      The controversial agreement was signed April 4 2003 by ministers of state: Mwesigwa Rukutana (Finance, Planning and Economic Development) and Kibirige Ssebunya (Agriculture, Animal Industries and Fisheries) on behalf of government, while Messrs Vimal Shah and Kodey Rao signed on behalf of Bidco. 

      Sources told The Monitor yesterday that former Kenyan President Daniel arap Moi's right-hand man, Mr Nicolas Biwott is among the shareholders of Bidco.

      According to the contract, government undertakes to give Bidco 26,500 hectares of land on a 99-year lease to grow palm oil from which to make the vegetable oil. 

      Bidco would only pay ten thousand shillings (10,000) per year rent on the land. 

      Government further commits itself to "pay company taxation for which Bidco is liable, as and when it arises, for a period of 25 years commencing from the first year of project activities without recourse to Bidco."

      Article 5 (3) of the agreement says: "The government shall exempt Bidco from payment of withholding tax on all interest on loans from any financial institutions of public character procured local or overseas for the financing of the project for a period of 25 years." 

      Subsection 4 exempts Bidco "from payment of all stamp duties in respect of the project for a period of 25 years." 

      Subsection 5 of article 5 of the agreement says: "government shall pay import duties, excise duties, cess, levy, imposition tax or surtax imposed on goods, pre-shipment inspection fee and VAT [Value Added Tax] on the imported/local plant and machinery, equipments and all capital goods," for a period of 25 years. 

      The government also commits to pay for Bidco all import duties, excise duties, etc "on agricultural equipment, heavy commercial vehicles, light vehicles limited to 4 (four) executive four wheel-drive vehicles, 12 (twelve) Jeeps/Land Rovers and 100 (one hundred) motorcycles, inputs including fertilisers, insecticides and pesticides for the project for a period of 25 years.

      Government further commits to pay "VAT on the product of the project from all companies envisaged under the project [Bidco will have many subsidiaries] from the first year of the project activities and ending after a period of 11 years from the year of handing over 26,500 hectares of land." 

      Government also commits to "indemnify and keep Bidco and its subsidiaries indemnified for any losses, damages, costs, claims, demands, and expenses rising from any breach of the provisions of this article."

      The director of economic affairs in the ministry of Finance, Planning and Economic Development, Keith Muhakanizi, yesterday told The Monitor that government got money from the International Fund for Agricultural Development (IFAD) to develop a vegetable-oil industry in Uganda. 

      He said government advertised for a competitive bid for persons willing to form a company to undertake the development of core palm-oil plantations. Mr Muhakanizi said that no one showed interest except the Madhvani Group, who were given the project but later abandoned it, hence recourse to Bidco.

      However, well-placed sources in the vegetable oil industry yesterday told The Monitor that the government tender did not include any incentives at all, hence the reluctance of many people to bid. 

      "For example, the bid only talked of 6,500 hectares of land, which was not enough to make the project viable," the source said, adding that "the government did not offer to construct roads, electricity or provide ferries - incentives that would have made the project viable - not to mention any tax breaks."

      However, under the agreement with Bidco, government offers to construct and maintain roads leading to all the sites in the country where the project will be, and to connect Bugala islands onto the national electricity grid. 

      Government further commits to provide fertile land, water, process work permits for company staff, etc. The agreement lacks many safeguards for the government. 

      For example, government commits to build weather stations for the company but does not specify how many. Industry sources say each weather station costs US$ 50,000 and Bidco may need 500 of them at a cost of US$ 25 million. 

      Further, Bidco offers to build a vegetable oil plant but does not specify the plant capacity. 

      If this agreement, its tax and other incentives holds, industry experts tell The Monitor, all vegetable oil businesses including Madhvani, Mukwano, Mbale Soap Oil, Kengro, Unilever, Nile Agro, and about 45 oil millers in northern Uganda, especially in Lira under the Uganda Oil Seed Processors Association (UOSPA) would face bankruptcy and their staff could be rendered unemployed overnight. 

      Bidco officials were unavailable for comment. The firm's team leader at its Nakuru office, Mr Dileswar Pradhan, said he was not in position to comment about the matter.
     



© 2004 The Monitor Publications


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Gook 

"The strategy of the guerilla struggle was to cause maximum chaos and destruction in order to render the government of the day very unpopular"
Lt. Gen. Kaguta Museveni (Leader of the NRA guerilla army in Luwero)


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