Company Fraudulently Procured to Manage Atiak Sugar Works- MPs

The Public Accounts Committee of Parliament on Commissions, Statutory Authorities, and State Enterprises (COSASE) has said that the ‘direct procurement’ of Horyal Company Limited to manage Atiak Sugar works in Amuru District was fraudulent.

COSASE, chaired by Joel Ssenyonyi, the Nakawa West Member of Parliament faulted the National Agricultural Advisory Services – NAADS for flouting bidding guidelines under the Public Procurement and Disposal of Public Assets Act, 2003 to procure the company.

The matter emerged during a meeting on Wednesday between MPs and officials of the NAADS Secretariat led by their Executive Director, Samuel Mugasi to answer queries raised by the Auditor General in a report for FY that ended 30 June 2022.

Trouble for NAADS started after the Committee learned that they paid Horyal Company Limited up to 15 billion Shillings to undertake bush clearing on 15,000-acre land in Lamwo district for sugar cane growing.

Tasked to explain how the Company was procured, Eunice Katto, the NAADS Head of Procurement informed the Committee that Horyal was ‘directly procured’ to avoid a time-consuming bidding process.

Rukiga County Member of Parliament, Ronald Ndyomugenyi, argued that Katto’s reasoning for procurement did not suffice and utterly contravened guidelines laid down in the Public Procurement and Disposal of Public Assets Act – PPDA, 2003.

Bumali Mpindi, the National Persons with Disability – PWD Representative queried why Horyal qualified for direct procurement without subjecting it to an open bidding process to allow other companies also to participate and labelled the 15 billion Shillings expenditure as inflated.

In defense, Mugasi revealed that the decision to contract Horyal was made following the directive from the Office of the Prime Minister, followed by the Minister of Finance, Planning, and Economic Development instructing him to contract Horyal in 2018.

Mugasi explained to the Committee that in the Finance Minister’s letter, NAADS was directed to “enter into a contract with Horyal and provide funds to complete the sugar cane out-growers scheme”.

According to the Auditor General’s report, the performance of sugarcane production under the sugar cane out growers’ scheme in the Amuru and Lamwo Districts has been affected by several challenges that included adverse weather, and other field conditions resulting in constrained operations.

Earlier on Tuesday, the committee faulted the NAADS officials for irregularly diverting seven billion Shillings during the FY under review without a budget. The entity also was implicated in diverting up to 2.1 billion Shillings in the previous FY 2020/2021 without seeking approval.

In May, the Budget Committee of Parliament declined to approve a 274.11 billion Shillings supplementary budget for Atiak Sugar Works, despite numerous pleas from Henry Musasizi, the Minister of Finance in charge of General Duties that the project is a national strategic investment.

The government’s expenditure through UDC and NAADS in Atiak Sugar Factory since its inception in the FY 2017/2018 currently stands at 563.22 billion Shillings while Horyal has contributed 121 billion Shillings.

Atiak Sugar Factory in which Government is a 40 percent minority shareholder through Uganda Development Corporation – UDC, is a subsidiary of Horyal Investment Holding Company Limited, owned by Dr. Amina Moghe Hersi, a female Kenyan entrepreneur of Somali descent.

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