Gov’t secretly giving bailouts?

Lead pusher Bitature bags Shs47bn

Government could be quietly handing out billions of shillings to private businesses, The Independent has learned from sources familiar with some of the transactions. What is not clear, however, is the extent to which those who claim that this is a `silent’ roll-out of the much talked about bail out to financially distressed firms are correct.

According to information available to The Independent, some transactions appear like legitimate payment of long-standing monies owed to companies that supplied goods and services to the government.

One transaction that is being talked about a lot is the government’s recent payment of US$14 million (Approx. Shs. 47 billion) to businessman Patrick Bitature, the proprietor of Simba Group of companies.

Insider sources say Bitature, who has interests in the hotel, real estate, finance and energy sectors, received the cash early August. Payment to Bitature has attracted a lot of attention and details of it have been discussed on some WhatsApp groups because Bitature’s biggest company, Simba Group, is high up on the list of over 60 businesses, which allegedly owe some Shs1.3 trillion to commercial banks and are pushing for a government bailout. Bitature is seen by some as the lead pusher for the bailout.

It is said that Bitature, who is the former Uganda Investment Authority (UIA) chairman has been working hand in glove with PSFU chairman, Gideon Badagawa to lobby government to save the ailing companies.

The two worked with the office of the Prime Minister and other organisations like Uganda Manufacturers Association (UMA) and Kampala City Traders Association (KACITA).

Following several meetings, they came up with a matrix detailing what government would do to save distressed companies.

Initially, private business people facing financial strain reached out to the president’s younger brother, General Caleb Akandwanaho, aka, Salim Saleh and lobbied him for a bail out.

But The Independent understands that, to make the effort and the talks around it more formal, the bailout discussion was transferred to Private Sector Foundation Uganda (PSFU). Now, it appears, their efforts have started paying. More and businesses and individuals could be getting their payouts.

Bitature was not available for a comment on the Shs47 billion he received.

Not a bailout- Minister

But the Minister of Finance, Matia Kasaija told The Independent that government is paying its domestic arrears adding that, “those calling it a bailout are using the wrong word”.

“We have said it again and again,” Kasaija told The Independent in an interview, “We do not have money to bail out companies. Government doesn’t do that. What we are doing is paying service providers because that is our obligation.”

The Director Budget at the Finance Ministry, KennethMugambe clarified that the Shs. 1.3 trillion that government had to pay out was not all for service providers. Of that, he explained, about Shs. 500 billion is for court awards and some of the remaining is money owed to international organisations.

“So the money owed to businesses is not that much,” Mugume said, “But what we did is instruct MDAs to pay the service providers. We do not know yet how much has been paid and how much hasn’t. We will be in position to monitor when this quota ends.”

Without divulging much details, insider sources said the money given to Bitature was payment for electricity supplied to the Uganda Electricity Transmission Company Limited (UETCL) by Bitature’s thermal generation plant, the 50MW Electro-Maxx Ltd-Tororo.

“Talk to the Energy Ministry for details,” Kasaija said when asked specifically about the payment.

Elias Kiyemba, the Executive Director, UETCL, which is in charge of buying power from generators like Electro-Maxx and transmitting to the distributors, confirmed that Bitature was paid through Electro-Maxx.

“We have paid these generators to current,” he said, “it is not only Electro-Maxx even others like Jacobsen have been paid to current,” he said.

It is not clear how much the government owes the two thermal generators.

But the Auditor General (AG) 2015 report raised queries about their payments. The AG was concerned that the “Government continues to pay capacity charges amounting to approximately UGX. 68bn annually, through UETCL, yet they are not contributing any power to the grid”.

“In light of the new anticipated investments in the cheaper hydroelectric power, Government could review the licensing policy of costly thermal plants and revert to them only when there is enough demand to accommodate the produced energy,” the report advised. Commenting on this, Kiyemba said although the thermal plants do not contribute substantial power to the grid, they remain critical for security purposes—that is in case something happens to the major power plants.