- Project representative says they are bringing in $300bn
A 66-hectare piece of prime land located in suburban Kampala was given away for a paltry $10 (approximately Shs 24,000) in annual rent, without any premium paid, The Observer can reveal. A representative of OpecPrime Properties Uganda, which secured the deal to develop the land, puts its current value at $20 million. However, government will have collected a meagre $990 (approximately Shs 2.4 million) in annual rent over the 99 years of the renewable lease.
According to a contract signed between the government and OpecPrime Properties Uganda, the real estate developer will pay annual rent of Uganda shillings equivalent to $10 for the two titles of Naguru and Nakawa estates. The contract signed on October 15, 2007, a copy of which The Observer has seen, stipulates that “the 99-year lease period may be renewable on such terms as may be agreed between the developer and the client.”
The controversial contract was signed by Vincent Ssekono, who was then Permanent Secretary for Local Government on behalf of government, and Brian Comer, the Director of OpecPrime Properties Ltd. Land experts The Observer spoke to concur that Shs 24,000 annual rent is way below the value of the 66-hectare prime land located just a few kilometres from the city centre. The sum OpecPrime will pay over the 99 years for the two estates would not even purchase one housing unit in the proposed satellite city.
The contract does not state that any premium payment would be made to the government for the land, as is the normal practice. A local government official familiar with such arrangements told The Observer that normally, a premium fee based on the value of the land would be paid upfront. Over the life of the lease, the premium and the annual rent would add up to the value of the land. The official found it laughable that OpecPrime would pay only $990 over 99 years for land it values at $20 million at present.
According to the contract, OpecPrime will use its own resources to develop the project. Government will not provide any direct funding for the redevelopment.
When contacted to explain the circumstances under which he signed the contact on behalf of government to give away prime land for a laughable fee, the former Permanent Secretary, Ssekono, said he did not remember the details.
“I signed that thing a long time ago. I retired, I don’t remember,” Ssekono told The Observer.
The two parties agreed that OpecPrime Properties, as a private developer, will redevelop Naguru-Nakawa estate into two ultra-modern satellite towns through the construction of modern residential, commercial and institutional properties and premises using the resources mobilised by the developer. OpecPrime Properties Uganda is a subsidiary of OpecPrime Development, a UK-based company owned by the Comer brothers, Brian and Luke Comer. The siblings run the parent company Comer Group. The group has dotted the world with homes, leisure parks, office parks, retails parks, retirement homes and Comer Hotels.
OpecPrime is required to construct 1,747 residential units for purchase and resettlement of registered tenants. Property experts concur that Shs 24,000 for 66 hectares is too low, given the fact that the houses will be erected for commercial purposes, not charity. Former tenants shall have only six months from the date of offer to complete payment for the purchase of the completed units.
The tenants signed a memorandum of understanding with government, which gives them first priority to purchase flats in the new estate. The contract, however, explicitly states that, “should the offeree (former tenant) fail to arrange financing and complete a disposal transaction with the developer (OpecPrime), the said offeree shall be deemed to have forfeited the offer of the dedicated unit and the developer shall be at liberty to find alternative off-taker of the unit”.
While the contract says that the unit will be provided at a low cost, which can be afforded by the former tenants who are low-income earners, the low cost is subject to interpretation by the developer who chooses what amount he will charge for the housing units in order to make profit on the investment.
The former tenants of the Naguru and Nakawa estates were evicted last year to prepare for reconstruction. The housing estates were built by the British in the 1950s to accommodate low income workers and servants working in British homes and businesses. The estate was taken over by the Ugandan government at independence, and it collected rent from the tenants until 2003 when the houses were pronounced dilapidated and unfit for human habitation. A hurried eviction of tenants, following protracted resistance that included court action, was followed by the razing of the houses and fencing off of the land in 2011.
Prince Charles Tendo, one of the representatives of OpecPrime in Uganda, says the issue here is not the pitiful $10 ground rent his clients are going to pay, but the “billion-dollar” project they are to undertake.
“Look at the bigger picture here, leave that micro thing. Uganda is not the best investment atmosphere. In order to attract investors, government sourced for international investors. Government brought land and the developer is bringing $300 billion. What is important is not the $10, but the huge investment that will span over 10 years,” Tendo says.
Under the contract, OpecPrime is required to develop the land within 10 years. With nearly five years gone, work doesn’t seem to have started on the ground.
Tendo explains that OpecPrime is currently working on a grand master plan, carrying out soil tests and topographic surveying in preparation for construction to begin. “We got the titles in November. A lot of work is not overtly seen, but a lot of money is being spent in master planning.
“It will take another six months before you see heavy machinery starting the construction of the super structures. This is a state of planning and planning a modern city is a lot of work,” Tendo said.