Relief for businessman Bitature as Uganda Government approves USD 66 Million bailout

The Government of Uganda Cabinet has approved a request to bail out businessman Patrick Bitature in a process that has involved the purchase of a struggling Electromaxx Thermal Power Plant in Tororo.

The International Chamber of Commerce Court of Arbitration in London, ordered Ugandan businessman Bitature, his wife Carol Nzaro, and four of their companies to pay South African lender, Vantage Mezzanine Fund, $66m US Dollars.

Bitature proposed to government to have his Electromax power plant taken over in a deal to bail him out, a request that later attracted an audit process by the Auditor General.

The Minister of Finance Matia Kasaija without revealing many details confirmed that government had indeed signed a Memorandum of Understanding with Bitature.

“Yes, we have done a Memorandum of Understanding with Bitature,” Kasaija said before ending the phone interview.

Auditor General John Muwanga had earlier cautioned the government against the purchase of Electromaxx Thermal Power Plant, citing several concerns including indebtedness and legal disputes surrounding the company.

The Auditor General’s recommendation is contained in a special audit report on the technical, legal, and financial evaluation of the Electromaxx Thermal Power Plant and the modular mini-refinery facility directed by President Museveni.

“I noted that ELECTROMAXX is indebted to the tune of USD 13,978,900 and UGX.138,537,919 in regard to ascertained debts being taxed costs attendant to litigation; and unascertained debts of USD 1,412,477.76 relating to pending or threatened litigations. These may cause an impediment on the ability of ELECTROMAXX to transfer facility assets to Government,” the Auditor General wrote in a report to the Minister of Energy and Mineral Development.

“The settlement of the indebtedness of ELECTROMAXX in regard to litigations should be agreed between ELECTROMAXX and Government during the decision-making process,” he added after a comprehensive audit that sought to assess the legal, financial, and technical evaluation and further determine the status of the Power Plant and the Refinery to facilitate the Government decision on acquisition of the facilities.

The report also found out that the two leasehold land titles for plots 185 & 200 and plot 198 with a combined size of 4.209 Hectares (10.400 Acres) on which the thermal power plant sits are subject to a Mortgage to Barclays Bank (U) Ltd (Now Absa) under term loan facility of USD.10m.

“Government should ensure that the inventory ownership status is clearly resolved between ELECTROMAXX and the O&M Provider. In addition, modalities of how the Mortgage with ABSA Bank will be settled should be agreed between ELECTROMAXX and Government during the decision-making process,” the report adds in parts.

“It should however be noted that two freehold Land titles i.e., Tororo Block 5 Plot 1583 and Plot 1706 both situated at Asinget A Zone, measuring approximately 16.172 Hectares (39.96 acres) attributed to the refinery are not registered in names of Simba Oil Limited and Electro-Maxx Uganda Limited. Management has not explained why the titles are not registered in the project owners’ names. In addition, one piece of land measuring approximately 13.12 Hectares (32.42 Acres) is not registered and there are no documents of ownership availed to us,” the report further adds.

It adds: “Furthermore, ELECTROMAXX did not obtain Petroleum Refinery License and there was no indication that all development permits required by the Physical Planning laws including building and excavation permits were obtained. However, ELECTROMAXX indicated during discussions of my finding that the Government had given a green light to the Project, and they had applied for the refinery licence with the Ministry of Energy and Mineral Development. This creates legal and regulatory compliance risks for the project.”

This website understands that the deal was brokered by the State Minister for Investment Evelyn Anite who neither confirms nor denies being part of the deal.