FINAL VERDICT: Vinci Coffee deal bad for Uganda, Parliamentary Committee rules

Uganda Vinci Coffee Company Ltd was recently awarded exclusive rights to buy Uganda’s coffee—sparking a public condemnation (PHOTO /Courtesy)

Parliament’s Trade Committee has cast doubt on the financial capability of Uganda Vinci Coffee Company Limited (UVCCL) to manage the processing and export of Uganda’s coffee after discovering that although government sunk in UGX7Bn to clear the 25acres in Namanve Industrial Park, the company is yet to lay any brick for the construction of a factory.

In a leaked report, the Committee observes that whereas UVCCL had indicated in 2015 that it had capacity to deliver on the project and had been granted all the necessary factors for it to start constructing the factory, UVCCL has failed to commence construction of the factory as envisaged by Government.

The Committee was informed that whereas Government had spent UGX7Bn to grade, fence, backfill the land and relocated the power lines over the proposed factory site, UVCCL had not commenced nor undertaken any activity as envisaged in the agreement.

The report highlighted, “UVCCL could not prove its capacity to deliver on the project and withheld vital information from the Committee relating to the feasibility Study it had allegedly undertaken as well as the architectural and engineering designs of the plant to enable the Committee assess its readiness to deliver on the project as had been agreed upon in the Agreement.”

According to Uganda Coffee Development Authority (UCDA) the cost required to construct and operate a 60,000-tonne coffee processing factory, to undertake the activities as those envisaged by UVCCL, was about USD440 Million about Shs1.422Trn.

The report also cited that UVCCL did not adduce any evidence or information to show that it had participated in the coffee value chain, in Uganda or elsewhere, thereby casting doubt on the ability of UVCCL to deliver on the project.

Although Ministry of Finance had been assured by UVCC of having earlier undertaken a feasibility study, and market survey, Minister of Finance Matia Kasaija confessed to have never seen a copy or content of the feasibility study and market survey; and efforts by the Committee to secure a copy of the said feasibility study and market survey from the Vinci Coffee Company Secretary were futile prompting the Committee to conclude that the feasibility study and market survey for UVCCL do not exist.

Further, UVCCL did not pay for the land allocated to it by Uganda Investment Authority (UIA) and instead received a waiver payment of the premium of USD 80,000 per acre equivalent to US$ 2million by UVCCL.

The Company also obtained authorization from UIA to mortgage the land that had been allocated to it to finance its activities on 3rd Aug 2018, although, at the time of this report, the committee had no way of establishing whether the land had not been already mortgaged because both parties failed to provide the committee with the land title.

The committee also observed that at the time this agreement was executed in February 2022, UVCCL did not possess a valid investment license since the one that had been issued to it in 2014 expired in 2019 without being renewed.

This means that UVCCL was not eligible to receive the tax incentives and other benefits granted to investors in Uganda.

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