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Questions over Bitature multibillion power deal
Businessman Patrick Bitature. PHOTO/FILE
What you need to know:
- Because the government doesn’t have enough money to buy out Electro-Maxx immediately, the businessmen through his power company entered into a five-year agreement with the government and that the Memorandum of Understanding (MoU) would be executed between the Uganda Electricity Transmission Company Ltd and Electro-Maxx.
A multi-billion power deal between the government of Uganda and city businessman Patrick Bitature faces backlash after the leader of Opposition in Parliament Mathias Mpuuga and other lawmakers questioned the motive at a time when the economy is limping.
In a build, operate, transfer (BOT) deal confirmed by Finance Minister Matia Kasaija yesterday and vilified by lawmakers as “stinky”, the businessman will operate the venture for five years and then transfer his Electromax diesel power plant to government to act as standby generator for 5 years at a cost of $13 million (about Shs48b).
The Principal Communications Officer at the Ministry of Energy and Mineral Development, Mr Solomon Muyita, yesterday revealed that “Bitature needed a bailout but government said yes, and considered his request to purchase Electro-Maxx and that’s why an audit was commenced by the Auditor General, adding that: “The firm that was used was KPMG, which was hired by Office of the Auditor General to do an audit which concluded recently, the government has executed a power-purchase agreement.”
Because the government doesn’t have enough money to buy out Electro-Maxx immediately, Mr Muyita, without divulging the overall cost of the power purchase deal, explained that the businessmen through his power company entered into a five-year- agreement with the government and that the Memorandum of Understanding (MoU) would be executed between the Uganda Electricity Transmission Company Ltd and Electro-Maxx.
Mr Mpuuga and the Shadow Attorney General Wilfred Niwagaba questioned the deal, which was signed off at a time when the country is reported to have “excess hydropower”. Mr Mpuuga said the thermal power deal, stinks because it is selective in nature and suspicious.
“Who made the evaluation of the deal to ascertain value for money? We have two power projects struggling in Karuma and Isimba, why would government divert money into a private entity,” Mr Mpuuga said.
Kira municipality MP Mr Ibrahim Ssemujju Nganda said: “When he was obtaining that money [loan] the contract was if he fails, they would take his property. Why didn’t they bail Suleiman Kiggundu when Greenland had issues? They are bailing Bitature I hope that those properties are not co-owned by people in government.”
Bitature woes
In July this year, the International Chamber of Commerce Court of Arbitration in London by a sole arbitrator, Prof Fidfelis Oditah KC, SAN ordered Mr Bitature to pay back over $65.7m (about Shs244.8b) to Vantage Mezzanine Fund II Partnership, a South African investment Fund or in default risks losing part of businesses.
This protracted legal matter ended up before the London Court of Arbitration after efforts by Vantage to auction Bitature’s properties including his hotels in the country, were frustrated by numerous legal suits that he put up.
The properties are owned by Mr Bitature but were mortgaged under his real estate holding company, Simba Properties Investment Company Limited (Uganda).
The $10million loan had been guaranteed by Bitature’s Simba Telecom Ltd, Linda Properties Ltd, Elgon Terrace Hotel Ltd, and himself.
The dispute dates back to 2014 when Vantage allegedly lent Mr Bitature $10 million (about Shs36b) to invest in the 14-unit Moyo Close Apartments and the Skyz Hotel in Naguru which were both still under construction.
The South African company claimed that neither the principal nor interest on the loan has since been by Bitature nor his companies claim that when they attempted to enforce the securities given to them in Uganda, Mr Bitature obstructed the process by engaging in various court proceedings.
They had further claimed that as of February 16, 2023, Vantage claimed the Bitatures owned them over $35million with the interest continuing to accrue in accordance with the facility agreement.
The Tororo based Electro-Maxx is an independent power producer (IPP) with 50MW capacity. It’s part of Mr Bitature’s Simba Group, an East African conglomerate with business interests in real estate, hotel and hospitality, telecom, oil & gas, agriculture, media and other aspects of business.
Speaking to Monitor last evening, the Energy ministry permanent secretary Ms Irene Batebe defended the deal, saying that the Auditor General said in his latest audit that the power plant needed to be revamped for it to be able to supply power, “and that is what the investor is going to do as part of their operation.”
“The audit report from the Auditor General has been received with regard to the plant and that is why we did align with him. Government is however, not taking the plant today,” the PS added without disclosing the other details.
When asked about the financial implications of the power purchase agreement, Ms Batebe declined to disclose the details within the agreement and explained her position on the matter was in line with the agreement and that disclosing such details would be going against the requirements of the agreements.
“What do you really want me to say, I have given you what is in the power purchase agreement. You are going beyond, call the investor [Bitature] and ask him about the figure, for me I am answering based on the power agreement we have engaged in.”
Efforts to get Mr Bitature were futile as he did not pick our repeated calls and text message by press time.
Investment and Privatization State Minister, Ms Evelyn Anite, who neither confirmed nor denied knowledge of the deal approved by cabinet on October 2 as said there was no problem for such a power purchase deal being entered into, adding that “I facilitate investments, I don’t want businesses to collapse because when they collapse, they will say Anite your businesses have collapsed so for me I don’t agree with businesses collapsing.”
“I will answer and don’t ask me more questions. Yes, we have done a memorandum of understanding with Bitature. Ok?” Mr Kasaija said and immediately hang up the call.
