The Ugandan Government has lost $28m (Shs92.8b) in taxes and export earnings following a production shortfall by Kakira Sugar Works, the company’s worst shortfall in 31 years.
Kakira is the biggest sugar producer in Uganda, producing about 180,000 metric tonnes per year followed by Kinyara Sugar Works with 120,000 tonnes and the Sugar Corporation of Uganda Lugazi (SCOUL), which produces 85,000 tonnes per year, among others.
Joint managing director of the firm Mayur Madhvani told Prime Minister Ruhakana Rugunda, who was visiting the firm last Friday that the mill will be producing between 110,000 and 120,000 metric tonnes this year, signifying a drop of between about 60,000 and 70,000 metric tonnes.
“Because of the shortfall in production, the country has lost taxes and revenue of about $28m. Power generation has also suffered and the whole industry is bound to suffer unless government takes quick action to address the problem,” Mr Madhvani said.
Mr Madhvani blamed the production shortfalls on the licensing of “small sugar firms” to operate within the same operation zones as the bigger producer. His argument is that such licensing, contravenes the National Sugar Policy which ordinarily prohibits the opening of new sugar mills within a radius of less than 25 kilometres of an existing plant and requires new factories to own at least 500 acres of sugarcane before commencement of operations. The small mills have been distorting the sugarcane supply chain yet they do not have capacity or efficiency to crush huge volumes of sugarcane.
“Now we do not have enough (sugar) cane and we do not have food security. This is really a national disaster. It is not only here in Kakira. Other millers will be affected along the way. Government needs to address this (problem) to help the industry become stronger and more vibrant,” he said.
Dr Rugunda promised to take up the matter with the Ministry of Trade, saying it is in government’s interest to sustain firms such as Kakira, which contributes to the national economy in various ways such as sugar production, power generation, production of ethanol and providing employment.