The Public Accounts Committee (PAC) of Parliament has directed officials from the Ministry of Finance to immediately submit details of the Palm Oil project account and bank statement for Financial Year 2017/2018 up to date.
The Public Accounts Committee (PAC) of Parliament has directed
officials from the Ministry of Finance to immediately submit details of the
Palm Oil project account and bank statement for Financial Year 2017/2018 up to
The directive by PAC Chairperson Nathan Nandala Mafabi followed inconsistencies
in figures submitted by the ministry over the land that so far has been
purchased by the Ministry and handed over to the Edible Oil Refinery Company to
develop the palm oil industry.
Officials from the Agriculture Ministry led by the Permanent Secretary Pius
Wakabi Kasajja on Monday appeared before PAC to answer to audit queries raised
by Auditor General John Muwanga in his report for June 2018.
In the report, Muwanga queries untitled land for the palm oil development
project in Buvuma and Kalangala worth 52.9 billion Shillings.
At the time of the audit, Muwanga says that 7,723.7 hectares of land along
Buvua Island had been acquired by the Ministry and that land measuring 5.857.3
hectares worth 52.94 billion did not have titles. The Auditor General cautioned
that the practice of acquiring land exposed such properties to high risk of
disputes, loss and encroachment with eventual unnecessary litigation.
Contrary to the audit findings, Wakabi said that the Ministry has so far
acquired 7,783 hectares and that out of these, 3,385 hectares have been
transferred in the names of Uganda Land Commission (ULC).
But Connie Magomu Masaba, the Project Manager of Vegetable Oil Development
Project in the Agriculture Ministry said that 5,000 hectares have been handed
over to the developer and that another 1,814 hectares were leased from Buganda
Kingdom and that the Ministry has a lease agreement with ULC engaging the
Buganda Land Board (BLB) to secure a lease title for the land.
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Government through the Finance Ministry in 2003 entered an agreement an Edible
Oil Refinery company for palm oil development. The government was required to
pay Value Added Tax (VAT) on the products of all companies envisaged under the
project from the first year of project activities ending after a period of 11
years, from the year of handing over 26,500 hectares of land.
It was also agreed that the company refunds the VAT paid by government with
interest over a period of 8 years in eight equal instalments, including accrued
interest starting in the 12th year.
During PAC’s meeting with Finance officials last week led by Under Secretary
Betty Kasimbazi, it was discovered that government has breached the contract by
failing to provide a balance of 10,000 hectares of land as agreed with no
documentation to show that the ministry has made any follow-up on the matter.
Government’s failure to provide the balance of the required land has seen the
Ministry continue to settle all tax obligations on behalf of the company and
that Finance has accumulated a total of 64.7 billion Shillings in arrears.
“It is apparent that instead of paying 11 years, Government has so far paid 15
years and is still continuing while the chances of recovery appear to be
uncertain. I advised the Ministry to liaise with the Ministry of Agriculture to
expedite the process of identifying and procuring all the required land and
also seek legal advice from the Attorney General on the possibility of amending
the terms of the agreement,” reads part of the audit report.
Kasimbazi then told PAC that it was true that government agreed that VAT
payable by BIDCO was differed until government hands over all the land agreed
upon. She said that so far, 11,500 hectares in Kalangala (6,500 hectares) and
Buvuma (5,000 hectares) had been secured and that there were on-going
discussions with landowners in Sango Bay to acquire another 10,000 hectares.
With inconsistencies in figures of land so far acquired, PAC Chair Nandala
today directed that the oil palm project account details and bank statements be
submitted to his committee by tomorrow. He said that his committee needs a
reconciliation of the land that was acquired by June 2018 and to date as well
as the people from whom land was acquired.
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The directive follows an earlier demand by the committee for the Finance Ministry
to start the process of renegotiating an agreement with an Edible Oil Refinery
company-which is in the country to develop the palm oil industry.