Workers feed fuel into a furnace at Atiak Sugar Factory in May 2021. PHOTO/ TOBBIAS JOLLY OWINY
Atiak Sugar Factory, which has drained Ugandan taxpayers’ money for the past four years, has once more benefited from the recently-passed Shs4.2 trillion supplementary budget, sparking public outrage. The factory, a joint venture between the government and Horyal Investment Holdings Company Ltd, last week received another additional Shs115 billion.
This brings to Shs668b the total investment that the government has pumped into the venture since 2020. The sugar factory first received Shs553 billion from government in 2020, but operated for only 19 months and shut down in 2022.
During the period, Atiak sold only 261,174 bags of 25kg packets of sugar, earning an estimated Shs15.9 billion. The factory then reportedly made Shs6.064 billion from selling 50,938 bags of 50kg packets of sugar locally, while exports to Kenya and Sudan brought in Shs12.1 billion.
Additionally, molasses sales earned Shs2.2 billion. This means despite the initial Shs553b sunk into Atiak Sugar, the factory has only generated Shs36.2 billion in return, with no clear projection of future profitability.
Nonetheless, the country was shocked to learn that more funds continue to be swallowed by the factory, which is no longer producing any crystal of sugar. Many have accused the government of using such ventures to lay waste the taxpayers’ money.
The government, through UDC, initially acquired a 10.1 percent stake in 2018, later increasing it to 40 percent by 2023. Despite an initial production capacity of 1,650 tonnes of raw cane per day, the factory has struggled with inadequate sugarcane supply, leading to frequent production halts.
Mr Joel Ssenyonyi, the Leader of the Opposition in Parliament (LOP) , who visited the factory last year and found it non-operational since 2022, called for an investigation into why it continues to receive government bailouts. Before even the concerns of Mr Ssenyonyi could be addressed or any answers provided, more funds have been sunk into the project without any clear assurance that it will ever produce sugar.
Parliament was last week informed by the Ministry of Finance that Atiak Sugar Factory requires more funding. A budget report presented on the floor of Parliament by Mr Dicksons Kateshumbwa, the Sheema Municipality MP and Budget Committee member, said Atiak has faced several challenges since its launch in 2020. The report cited Atiak failure to meet planting needs, frequent fire outbreaks, inadequate infrastructure, labour shortages, and high raw material costs.
Mr Kateshumbwa said additional funds were required for agricultural extension services, public infrastructure, and housing development, irrigation, factory expansion, and debt financing. The Budget Committee report said: “The committee was informed that Atiak Sugar Factory required funding.
The government acquired a 40 percent ordinary shareholding in the factory. However, since 2020 when it started operations, the factory has faced numerous challenges.” With the latest Shs115 billion allocation, the total amount spent on what many critics have labelled a “ghost company” has now reached Shs668.7 billion.
This places Atiak Sugar Factory among the top five private entities that have received vast sums of taxpayer money with little to show for it.
Opposition criticises bailouts
Mr Ssenyonyi in an interview on Monday said he had warned Parliament against approving more funds for the factory, which has remained non-functional, but his pleas were ignored. “When we visited the factory in October 2024, it was not operational, and there was no indication of when production would resume,” he said.
Mr Ssenyonyi said the Opposition had cautioned the government against injecting funds into private entities such as Lubowa Hospital, Inspire Africa Coffee Company, and Atiak Sugar Factory after finding no tangible results on the ground. “We warned the government to stop injecting funds into private entities, but we have been disappointed by the legislators, the majority of whom are from the NRM, who beat us with numbers,” Mr Ssenyonyi lamented.
During his visit last year, Mr Ssenyonyi found nothing to show for the Shs553.8 billion that had so far been sunk into the project and demanded accountability. “As investors, you have injected your money here. Taxpayers have injected money here. But we are frustrated on behalf of the taxpayers because there is no production happening,” Mr Ssenyonyi told Daily Monitor last year.
Minority report raises concerns
A minority report presented by Mr Ssemujju Nganda, the Kira Municipality MP, pointed out that despite the massive government investments, the State owns fewer shares than the private investor, Horyal Investment Holdings Company Ltd.
Mr Ssemujju warned that such investments have previously caused the government financial headaches, citing the ongoing struggle to buy Umeme. “The stake of Ugandans in this factory is a 40percent ordinary share bought at Shs80 billion.
This company was last valued in 2018/2019 at Shs205 billion. The government also holds preferential shares but has little influence on the board despite continued funding,” he noted.
Mr Ssemujju questioned the logic behind investing such vast sums with minimal returns. “Ms Amina, who has invested Shs125 billion in the company, owns 50 percent of the shares, while the government, which has injected Shs668 billion, holds only 40%.
Only a madman continues making such an investment. We are being taken for a ride. These sorts of agreements are why we have ended up where we are with Umeme,” he added.
Govt defends Atiak
The Uganda Development Corporation (UDC) is mandated to oversee the sugar factory’s operations. But Mr Denis Dokoria, the communication manager of UDC, said the factory faced many challenges that forced it to cease production.
He cited the lack of sufficient raw materials, infrastructure and labour, which made the government to re-strategize. “When the challenges came up, the government re-thought and decided that it would invest in the agriculture component to make sure the gardens are working to feed the factory with sufficient raw materials,” Mr Dokoria said. He stated that the additional funds are intended to ensure an adequate supply of both sugarcane and water for the facility.
Given that sugarcane takes 18 months to mature, the factory is projected to resume operations in 2027. “We are going to plant the seeds to expand the gardens and ensure we raise the 1,650 tonnes which were initially crushed per day by the machines. Once we increase production, we shall also increase the capacity of crushed stones,” Mr Dokoria said.
Meanwhile, Dr Chris Baryomunsi, the ICT Minister and government spokesperson, said while government investment in private ventures is not inherently bad, there is a need for audits to assess value for money. “These facilities are part of our efforts to build the economy. However, there is a need to audit them to assess value for money.
We are hopeful that the funds are put to good use, and we shall check to ensure the factory yields results,” Dr Baryomunsi said. Whereas this is not good news to the farmers, Mr Perez Kawumi, the vice president of Uganda National Farmers Federation, said the issue is very political and he was not comfortable commenting about it.
Destroyed. What remained of an estimated 600 acres of sugarcane after fire gutted the plantation at Atiak Sugar Factory in Amuru District on Monday. COURTESY PHOTO.
BACKGROUND
Atiak Sugar Factory, established in 2013 and officially launched in 2020, is located in Atiak Subcounty, Amuru District, about 17 kilometres north of Atiak Town. The government, through UDC, initially acquired a 10.1 percent stake in 2018, later increasing it to 40 percent by 2023.
Despite an initial production capacity of 1,650 tonnes of raw cane per day, the factory has struggled with inadequate sugarcane supply, leading to frequent production halts. The plantation has also suffered repeated fire incidents, including a major blaze in December 2021 that destroyed 200 acres of sugarcane.
Investors have since urged the government to address these fires, suspecting arson. Despite over Shs550 billion invested by late 2022, the factory has yet to meet production expectations, prompting Opposition calls for an investigation into its persistent underperformance. Other sugar factories, such as Amuru Sugar Works Ltd, Bugiri Sugar Factory, and Kamuli Sugar Factory, which benefited from government initiatives to address sugar shortages in 2011, are operational.
However, Atiak Sugar Factory, despite receiving the largest funding, has faltered. The continued financial support for the factory, despite its operational struggles, has fuelled public debate about the prudent use of taxpayer funds and the accountability mechanisms in place for largescale agricultural investments.
Atiak Sugar Factory is managed by Ms Amina Moghe Hersi. “Where we have gone wrong, I ask for forgiveness. And if we have eaten money, I think you can sell the whole investment and even take me, because my properties, including my home, are mortgaged everywhere,” Ms Hersi said last year during the visit by the Leader of the Opposition in Parliament.
