Ministry illegally issuing sugar mill licenses, court rules

Workers gesture after loading cane on sugarcane trucks in Jinja City in 2024. PHOTO/TAUSI NAKATO.
What you need to know:
- The decision of the court was a result of the case in which the Uganda Sugar Manufacturers Association Ltd (USMA) sought prerogative orders against actions and/or omissions by the Attorney General and the ministry of trade.
Court has ruled that the Ministry of Trade has been issuing licenses to establish sugar and jaggery mills without following the required procedures.
According to Justice Douglas Karekona Singiza of the Civil Division of the High Court in Kampala, the line minister has been using certificates of no objection to enable investors to set up sugar mills, yet the law demands that the same should be issued by the Uganda Sugar Board (USB).
The court’s decision implies that in the absence of the Uganda Sugar Board, no new sugar license is valid, and no new sugar plantation should be established within a radius of less than 25 kilometers from another.
“A declaration is made that the purported sugar and jaggery mill licenses are not only illegal but also contravene the existing government policy on sugar in Uganda,” Justice Singiza ruled.
He added: “A declaration is made that the establishment of CN and Shakti sugar and jaggery mills within the 25 km radius of the other existing sugar and jaggery mills is contrary to the government policy on sugar, as amplified by the presidential guidance on the zoning of sugar business enterprises.”
About the case
The decision of the court was a result of the case in which the Uganda Sugar Manufacturers Association Ltd (USMA) sought prerogative orders against actions and/or omissions by the Attorney General and Minister of Trade, Industry, and Co-operatives (MTIC) to allow CN Sugar Ltd (CN) and Shakti Sugar (Shakti) to establish sugar and jaggery mills without the requisite licenses.
USMA's complaint was based on 20 grounds.
They among others stated that the sugar industry in Uganda is regulated by the Sugar Act, within which provision is made for the establishment of the Uganda Sugar Board (USB).
The mandate of the USB is to license sugar mills, jaggery mills, and other plants that process sugarcane byproducts.
The petitioners contended that, to date, the trade ministry has deliberately refused to operationalise the Uganda Sugar Board and continues to issue licenses disguised as "letters of no objection (LONOS)” to new sugar-producing companies, as was the case with CN and Shakti, an act that violates the law and the existing government policy.
Singling out acts of issuing licenses to new investors to start sugar mills without following the law, the petitioners had claimed that the Resident District Commissioner of Namayingo District Council, who, together with his assistant, had illegally encouraged the development of sugar mills in the area, leading to an oversaturation of actors in that Busoga area.
“The oversaturation of [sugar] mills in certain regions of the country is presented as a problem that has facilitated the poaching of sugarcane and other anti-competition practices,” ruled the judge.
The Uganda Sugar Manufacturers Association Ltd maintained that the grant of the sugar mill and jaggery licenses and the attendant proliferation of such mills are illegal and a contravention of existing state policy.
They also stated that besides the 2010 government policy requiring that sugar mill factories be within a radius of 25 kilometers of each other, some factories were within a distance of 19 kilometers, violating the government policy and a presidential executive order issued in 2017.
“A declaration is made that the establishment of CN and Shakti sugar and jaggery mills within the 25 km radius of the other existing sugar and jaggery mills is contrary to the government policy on sugar, as amplified by the presidential guidance on the zoning of sugar business enterprises,” justice Singiza held.
Adding: “An order is hereby granted to CN and Shakti to immediately halt all their sugar and jaggery mills until they have been duly licensed by an authorised body.”
The judge also issued an order, canceling all purported new sugar licenses or permissions in the form of Letters of No Objection that had been granted to CN and Shakti.
Additionally, he issued an order restraining CN and Shakti, and any other sugar and jaggery mill enterprises from illegally constructing any sugar mills that are in contravention of the law.
The court also ordered the Trade Ministry to within three months, per Section 4 of the Sugar Act, put in place the Uganda Sugar Board, a body that is clothed with the powers to grant licenses to new investors to start sugar mills.