17 September 2006

Uganda: NFA Cancels Allocation of Katugo Forest

Kampala — THE National Forestry Authority (NFA) has cancelled the allocation of Katugo forest reserve in Nakasongola district to private investors under a 50-year concession, reports Gerald Tenywa.

This follows a three-month wrangle over the concession.

"I'm hereby instructing you to call off the bid exercise and notify the bidders accordingly," NFA's executive director Olav Bjella told his procurement manager.

Bjella cited lack of sufficient competition from companies that expressed interest and that the would-be successful company did not meet the overall intention of establishing additional industrial capacity.

Part of the top NFA management wanted the Inspector General of Government to investigate the allocation, saying there was influence-peddling.

In a statement released on September 12, Gaster Kiyingi, the NFA spokesperson, said the forestry authority would consider the initiative later.

Last month, The New Vision reported that the proposed allocation of Katugo forest reserve had split top forestry officials.

One group on the NFA allocation committee ruled in favour of Nile Ply, whose bid was slightly above $9m (about sh15b).

This was contested by another group, which preferred New Forests Company that had offered $13m, although most committee members said "it had inferior credentials."

The ground for contention was that the company allocated the managing licence for the 3,000-hectare reserve had "a sound track record in sawmilling and had presented all the necessary conditions."

Sources within NFA said the stated value of the reserve estimated at $9m needed to be reviewed and that the Government could lose a lot of revenue.

Sources within NFA said the infrastructure, including houses built with support from Norway and the young trees, were left out during the evaluation.

"We know that the NFA works in a business manner, but we do not understand if they leave out the assets for the private investor to take for free," sources said.

Kiyingi said the initiative was supposed to pave way for large scale private sector forestry development in Uganda.

One of the big challenges in Uganda's forestry sector has been the lack of a vibrant private sector. This has been partly due to lack of model investments to show the profitability of investing in forestry.

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