Tororo fertiliser project hit by financial shortage

The plant, once completed, is expected to produce organic fertilisers with a target of 300,000 metric tonnes annually. PHOTO | FILE

What you need to know:

  • Government had identified the Sukulu Phosphate Project as one of Uganda’s core project that would support commercialisation of agriculture through reduction in fertiliser imports and prices. 

The Sukulu Phosphate Project is seeking funders with works at the Tororo-based fertiliser having delayed since 2019 due to financial difficulties. 

The project, which was launched by President Museveni in 2018, is now in urgent need of funders after most of its funding prospects were hit by Covid-19. 

Speaking in an interview at the weekend, Mr Changmin Lee, the deputy general manager of Guangzhou Dongsong Energy Group Uganda, said the project has been delayed due to lack of money, noting that what had been available had already been spent on geological exploration, land acquisition and construction of staff quarter, among others. 

Financing

Guangzhou Dongsong, the project owners, according to Mr Lee, had obtained a financing facility from Industrial Commercial Bank of China (ICBC) for the entire project. However, the bank in 2019 informed Dongsong that the $60m, part of which was the undisbursed balance, had to be redistributed as a result of a new policy that demanded that ICBC lowers its overseas loan centralisation ratio.

The bank also cited a case by Ms Fang Min and risks associated with Covid-19 as grounds for the revision in its earlier commitment.   

“Unfortunately, in 2019, ICBC notified us that the balance of the loan must be redistributed due to its policy of lowering overseas loan centralisation ratio. It also cited Ms Fang Min’s lawsuit and risk management due to Covid-19 as grounds for the revision,” Mr Lee said, noting the project had to be put on hold because planned funding of close to $60m could not be accessed.

In 2019, Ms Fang Min sued LV Weidong, Guangzhou Dongsong’s parent company, over phosphate mining rights at Sukuru in Tororo District. 

In a case filed before the Commercial Division of the High Court, Ms Fang Min claimed she had been duped in the process of acquiring the mining licence thus seeking compensation of $12m. The case is yet to be disposed of. 

Mr Lee also noted that ICBC has since asked Guangzhou Dongsong to clear accruing interest on the loan, which worsens its financial position yet some of its equipment worth $15m is held up at China port pending clearance.

Thus, he said, the current financial position had left them with no option but to seek development partners to fund the project to completion. 

Commercialisation         

Government had identified the Sukulu Phosphate Project as one of Uganda’s core project that would support commercialisation of agriculture through reduction in fertiliser imports and prices. 

Therefore, given its strategic importance, Mr Lee said, it was prudent that partners such as government reach out to collaborate funding for completion of the project as well support Guangzhou Dongsong on the issue of accruing loan interest, which currently presents the biggest threat to the project.

While launching the project in 2018, President Museveni had noted that the huge phosphate deposits in Tororo, if linked with the huge natural gas deposits in Tanzania, would enable the region to forget about the importation of fertiliser inputs such as nitrogen, phosphates and potassium among others.


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