Museveni, Mogas boss’ land deal ignites debate

Mogas defaulted on the loan obligations resulting in a protracted negotiation. PHOTO/FILE

What you need to know:

  • Dr Kizza Besigye, the former Forum for Democratic Change president called the decision to purchase the land from the Rugazoora family “terrible”. 

President Museveni’s directive to Prime Minister Robinah Nabbanja to compel the government to purchase 15 acres of prime land in Mukono from businessman Geofrey Rugazoora has drawn criticism from a section of Ugandans.
They accuse the President of dishing out taxpayers’ money to close relatives and friends at the expense of the rest of Ugandans.

The President in a September 5 letter issued a directive to Ms Nabbanja to work out a bailout for Mogas business owned by Rugazoora family. Government agencies are to buy 15 acres of prime land in Mukono at the prevailing market rates.
“There is a Ugandan family, the Rugazooras that are quite active in businesses, including owning petrol stations in Uganda, Tanzania, Burundi, Congo etc. They have some debts that they could not promptly settle because of the Corona pandemic. 

However, they have prime land of 15 acres in Mukono near the railway. If the government bought that land, they would get the money that could help them to reschedule their debts into manageable installments that they would be able to pay over a period of seven years,” part of the letter reads.
“Let, therefore, the appropriate agency of the government buy that land at the prevailing market price. Should it be the Ministry of Finance, Planning and Economic Development or Works, which one to buy? Involve the attorney general to advise you. Move fast so that the debt does not escalate,” the letter concludes.

A number of Ugandans have come out to condemn the deal, saying it points to the selective favours Museveni offers to some people at the expense of taxpayers.
Ugandans we spoke to wondered why the President is the one interesting government to buy the land, or whether the land had been placed on sale but failed to attract private buyers. They also raised questions on what could be special with the Mogas oil dealer to attract such a favour from the head of State as many local businesses go under. 

Kampala City Traders Association last week petitioned the Parliament and asked for a special fund to rescue their businesses. They also asked the government to reign in on the high interest rates charged by the commercial banks.
Dr Kizza Besigye, the former Forum for Democratic Change president called the decision to purchase the land from the Rugazoora family “terrible”. 
Dr Besigye said while civil servants are being told that there is no money to pay their salaries, the president is moving to purchase land when his government should address pressing issues.

“Among other contemptible and unlawful transactions Mr M7 conducts from Uganda’s highest office, he now adds that of a broker/ merchandiser (Kayungirizi)! What’s more terrible is that this takes away the little public money in the treasury, when his government can’t even pay workers!” he tweeted.
Mr Faruk Kirunda, the deputy presidential press secretary, however, said the directive should not cause anxiety because it is normal to respond to request from distressed businesses.
“You have seen that railway station near Katosi junction and that’s where they said they have 15 acres of prime land which they want to sell. You know as a country we have plans of redeveloping our railway system and if the government finds the land fit, there is no problem buying the land for that purpose,” Kirunda said.
He said while the request was sincere, many Ugandans have since turned the issue political.

What is at stake
Mogas, a multinational integrated downstream oil marketing company, was founded in 1987. It runs a range of business operations such as international oil trading to marine and inland terminals, retail networks, and lubrication services. 
The company runs fuels, oil and lubricants in East and Central Africa with operations in Uganda, Kenya, Tanzania, Rwanda, Burundi, the Democratic Republic of Congo and the UAE. 
In Uganda, the company owns inland fuel depots with a capacity of 5,000 m3 in Kampala with its main fuel depot located at Banda in Eastern Kampala. It is also the sole distributor for Castrol in Uganda and Rwanda.

According to information on the company website, the group employs more than 300 staff members and currently maintains seven operating companies.
Since the outbreak of Covid-19, a of Ugandan businesses have closed while the government looked on. Government during the lockdown announced a Shs500 billion bailout fund which it put in Uganda Development Bank. However, a number of businesses that tried to access funds were denied with only a handful benefiting.

Last year, Stanbic Bank took over the operations of Mogas and placed it under receivership after the company failed to repay billions of debts. 
Available data indicates that between 2018 and 2020, Mogas borrowed 12 loans totaling to Shs43.2 billion, including both the principal and the interest. However, since then, the company failed to service the loan, forcing Stanbic Bank to put it under receivership.

In January, the High Court judge, Justice Jeanne Rwakakooko, however, granted a temporary injunction of six months to Mogas to allow the company complete its negotiation with Ola Energy Ltd which was willing to take over Mogas and pay off a debt.
Mogas had contested the move by Stanbic, arguing that they had notified the bank about their talks with Ola Energy. The company accused Stanbic of rushing to put it under receivership just before the grace period could run out, rendering their arrangements with Ola invalid.
The bank said in their letter of intention to take over that Mogas had been a client of Standard Bank Group and multi-borrowed across several jurisdictions, including Uganda where the asset takeover was being applied.
However, it is not clear where the deal between Mogas and Ola Energy ended because we were unable to get through to the two parties.

Early this year, Gaagaa Bus Company, a company operating a fleet of buses on West Nile, Northern routes and to Rwanda and Burundi folded its businesses after it ran broke and could not afford operating costs. Cries were loud for a bailout from the government that never came through.
Several other businesses such as Ssembule Investments have all collapsed without government intervention.
However, In March 2008, NSSF bought more than 464 acres of land from Nzeyi and Arma Limited, a company linked to then Security minister Amama Mbabazi, at Shs11 billion. Each acre of the land was bought at Shs24m, above the prevailing market price at the time.

Ugandans react

Mr Wafula Oguttu, the former MP for Bukoli Central, wondered why the president has continuously dished out money to few individuals.
“...Why can’t he put in a place a policy framework that gives everyone equal opportunities? Sectarianism is growing, dangerously,” he responded to a tweet by Kirunda.
Olivia Nalubwama Juliet said the president has rendered institutions in the country helpless.
“What are the formal mechanisms for Ugandans in similar predicaments who unfortunately do not have access to the President’s ear?,” she asked.
Simon Wavamuno, an economist,  said private investors should be the ones to purchase the land. 
Edwin Basiime, however, defended the decision, saying it is good for Ugandan owned businesses. 
He said the company employs many Ugandans, adding that its collapse will affect many.


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