Uganda seeks to extend tax exemption for Bujagali Hydro Power Project

KAMPALA, Uganda — The government is seeking to extend a tax exemption for the Bujagali Hydro Power project through June 30, 2032, under the proposed Income Tax (Amendment) Bill, 2025.

The bill, which was tabled before Parliament on Thursday, aims to grant the power company another tax waiver. This comes after a similar exemption was sought last month, which would have extended the tax exemption until June 30, 2025.

Minister of State for General Duties Henry Musasizi, who tabled the bill, faced concerns from lawmakers regarding the management of preferential shares by Bujagali Energy Limited. Legislators argued that the redemption of these shares led to financial losses for Uganda.

Budadiri West MP Nandala Mafabi accused Bujagali Energy Limited of unfairly profiting from Ugandans through questionable accounting practices. “You cannot remove money from a balance sheet without making adjustments,” Mafabi said. “It is criminal to redeem shares and continue charging Ugandans the same high tariffs.”

Lawmakers also accused the power company of double-charging Ugandans. Mafabi emphasized that Bujagali Energy Limited earns significant profits at the expense of ordinary citizens. “They are getting a 19% return on investment and still making extra profits,” he said. “This is cheating Ugandans under the guise of investment.”

Between 2018 and 2021, the government granted the power company similar tax exemptions. However, in 2023, Parliament rejected the government’s request for another five-year tax exemption.

The Bujagali Hydropower Project, a 250-megawatt facility commissioned in 2012, has faced controversy over its financial sustainability and cost to consumers. Initially hailed as a solution to Uganda’s power shortages, concerns over high tariffs and continued tax waivers have sparked criticism from lawmakers and the public.

The proposed amendments to the Income Tax Bill, 2025, also include a three-year tax exemption for startup businesses established by citizens. According to Musasizi, this exemption aims to encourage entrepreneurship, support small and medium enterprises, and stimulate innovation.

The bill was referred to Parliament’s Finance Committee for consideration.