MPs probe how Bujagali company won multi-billion contract before it was even registered

An Ad hoc committee of parliament has unveiled inconsistencies in the ownership and registration of Bujagali Energy Ltd, the company that owns and operates a 250MW hydropower plant on the River Nile.

The power plant was commissioned in 2012 and has been supplying energy to the Ugandan grid. But MPs learnt that the company won a multi-billion contract before it was even registered and that the original owners of the projects forfeited their shares when the company was incorporated.

The matter resurfaced on Thursday when Josephine Ossiya, the head of finance and administration at Bujagali Energy Ltd together with the general manager Alaister McDougall appeared before the committee which is investigating the irregularities in the hydropower project as raised by the Auditor General's report for FY 2020/2021.

The committee seeks to ascertain the government's equity contribution to Bujagali, return on investments, the cost-benefit and value for money for the income tax exemption over time among others.

Sheema Municipality MP Dickson Kateshumbwa raised a query after Ossiya, said that the company was incorporated in August 2005, yet records show that the same company was contracted in 2004 by the government.

But McDougall informed the committee that the current team is new and has little information about how the company was formed. His defence prompted Otuke County MP Paul Omara to question how a general manager can take up office without accessing such information.

The committee also learnt that Bujagali Energy Limited was formed by two individuals Ebert Byenkya and Innocent Kihika each injecting Shs 1 million. But the duo forfeited their shares after the company was incorporated.

The revelation attracted questions from MPs on how a Shs 2 million company came to win a multi-billion contract and the government's basis to invest $20 million (Shs 77.2 billion) therein. The Bujagali officials failed to explain the controversies prompting the Kateshumbwa who was chairing the committee to adjourn the meeting.

In May 2022, the speaker of parliament Anita Among set up an ad hoc committee after parliament rejected the request to extend the five-year tax exemption to the company, and instead agreed on a one-year exemption so as to allow the government to conduct a forensic audit into the earlier 15-years' tax exemption.

This followed a proposal by state minister for Finance, Henry Musasizi, to extend the income tax exemption for the Bujagali Hydro Power project from July 1, 2022, to June 20, 2027.

The proposal was rejected, in part with MPs demanding that government undertakes a comprehensive study on the cost benefits of tax exemptions, after realizing that in 2021/2022 tax exemptions cost Uganda Shs 7.7 trillion in would be revenue.