UVCCL coffee deal: Investors want to mortgage govt land at Namanve

KAMPALA– Even though President Yoweri Museveni and NRM caucus Members of Parliament [MPs] have agreed to review the controversial coffee export deal signed between the government and Vinci Coffee Company Limited [UVCCL], the Parliamentary Committee on Trade, Tourism and Industry has via investigation, established that the owners of UVCCL now want to mortgage land given to them to fund their business.

On February 10, 2022, the Minister of Finance, Matia Kasaija signed the deal with Pinetti to allow UVCCL to establish a coffee processing plant. According to the deal, the coffee company would retain exclusive rights to buy all of Uganda’s coffee on top of enjoying 10 years without paying taxes.

Chaired MP Mwine Mpaka, the parliamentary committee yesterday quizzed officials from UVCCL led by the company secretary, Moses Matovu where they unearthed several irregularities regarding the coffee agreement where Enrica Pinetti, a director in UVCCL, allegedly asked to be allowed to mortgage 25 acres of government land in Namanve Industrial Park to secure a bank. The land was freely given to UVCCL to set up a coffee factory.

MP David Isabirye told the committee how UVCCL reportedly wrote to Uganda Investment Authority (UIA) seeking permission to use the land titles for the said land to acquire a loan.

This is despite the fact that the Finance Ministry Permanent Secretary Ramathan Ggoobi said days ago that the company had $80 million to sink in the proposed coffee factory. “Vinci is the investor that came forward with a plan to do what the government wanted to be done. They offered to invest $80m to process coffee here, and then sell it in virgin markets in Europe and elsewhere,” his Twitter handle read on April 15, 2022.

According to Isabirye, the request to mortgage the said land was hastily granted by UIA in the wee hours of the night.

“This email was written on 01 September 2018 to the acting board chairperson of Uganda Investment Authority and it was replied at 2:36 am in the morning. The acting executive director of UIA acknowledged and gave a no objection at 7:59 am when offices were closed. I really want to applaud them for working trans-night,” Isabirye said.

However, the company secretary Matovu has denied the allegations saying that UVCC has neither borrowed any money nor mortgaged the title of the said land in Namanve.

“UVCC has never borrowed any money or mortgaged the titles of the land in Namanve. I also heard that UIA is in the [committee] room; they are the leaser in respect to that land, if they have information that this land has been mortgaged, I would like to see that information. But as Company Secretary, I can confirm to you that we have never borrowed, we don’t have any loan,” Matovu who had already been put on oath said.

But Bwamba County MP Richard Muhumuza Gafabusa tabled before the committee an email in which Pinetti wrote to UIA Acting Director, Basil Aja seeking authorisation to use the land title to secure a loan.

“We were awarded a lease in favour of the land measuring 25 acres comprising of Kyangwe block 113 plot 738, Namanve, Mukono District. We took possession of the land and have started development of our site. We intend to mortgage the land to secure a credit facility to enable us to establish and operate an integrated roasting, grinding and instant coffee processing plant in our industrial site mentioned above. I hereby seek your approval for the facility,” Muhumuza read Pinetti’s letter.

Matovu later acknowledged the correspondences but insisted that the request to mortgage government land did not materialize, prompting the committee chairperson Mwine Mpaka to demand for a copy of the land titles.

“Your director, Pinetti requested for a mortgage and when you look at the speed for acquiring the mortgage, it means it was of urgent importance. Now you cannot come to this committee and say you have never mortgaged; but the intention was to mortgage and when you look at these documents, you can see there was so much speed,” Mpaka said.

Kaberamaido County MP Alfred Edakasi wondered why UVCC was mortgaging land yet they are not even paying a premium to the Government of Uganda.

“UIA gave all this land to the company and waived off the premium which would amount to about US$2 million. Why would this company want to mortgage the land, which they have not paid a premium for? And why would UIA allow them to mortgage it when even the premium which would have been the basic gain for government has not been paid?” Edakasi questioned.

Matovu was later handed over to the police Criminal Investigation Department (CID) for further inquiries after presenting to the committee contradictory statements in regards to the said land. Mpaka demanded that Matovu produces the said land title to prove that the land has not been mortgaged.

UIA Executive Director, Robert Mukiza said that for a foreign investor to be allowed to mortgage the land title to acquire a loan, they are required to have constructed the factory to 60 percent completion while the local investors are expected to fulfill the construction to 30 percent.

According to Kimanya-Kabonera Division Abed Bwanika who raised the matter on the floor of Parliament on Tuesday, 12 April 2022, the agreement alienates Ugandans from the coffee business as it gives monopoly of purchase and export of coffee to only one organization.

Meanwhile, local farmers and exporters want the coffee deal to be cancelled as soon as possible on grounds that if disadvantages them.

The appeal was presented to the MPs by Dr. Tony Mugoya, the executive director of Uganda Coffee Farmers Alliance, who said about 40 coffee processing, packaging and exporting companies are threatened by the clauses in the agreement that disregards their contribution to the sector.

“All coffee export companies have invested heavily in building export processing factories as well as in-country relationships with farmers, traders, and processors through lines of credit, extension services,” Mugoya told MPs in parliament, adding that it is oppressive and that it violates the provisions of the National Coffee Act.

The Attorney General, Kiryowa Kiwanuka still maintains that the agreement is fine, even though coffee producing cooperatives fear that the agreement could throw them out of the coffee business if is not reviewed holistically.

Bugisu Cooperative Union, a leading dealer in Arabica coffee, is one of those cooperatives that intend to drag the government to court over the controversial deal.

Apparently, the agreement exempts UVCCL from paying all the taxes, including Income Tax, Pay As You Earn, Excise Duty and National Social Security Fund and also seeks to subsidize the company, giving them a special tariff in terms of electricity contrary to the Coffee Act.

https://thecooperator.news/ico-members-receive-draft-of-new-international-coffee-agreement/

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