Lominda Afedraru
9 November 2009
Government has accepted to pay $16 million (Shs30.3 billion) to a foreign investor who was authorised to construct a cement factory in Kamwenge District, but the contract was terminated prematurely.
The Indian-based company, Dura Cement Ltd, sued the government over unlawful cancellation of its mining lease for raw materials at Dura site in Kamwenge and giving it to Hima Cement Ltd. The company claimed the act is breach of contract for which the government is held liable.
The company sought court orders directing the government to compensate its management $103.5 million about (Shs194.4 billion) for the unlawful cancellation of its lease. Both parties later went to the Commercial Court Arbitration Registrar, Mr Henry Haduli, where the government accepted to pay the Shs30 billion.
Consent signed
"By consent of both parties judgment is hereby entered in favour of the plaintiff. In the following terms, the government shall pay to the plaintiff $14 million as special damages for cancellation of the mining lease and $2million shall be paid as general damages each attracting eight per cent interest from date of judgment till payment in full. The money shall be paid in lumpsum," a consent judgment signed before a registrar on October 30 reads in part.
The company claimed limestone quarries at Dura in Kamwenge were leased by the government to several companies since 1952 but none of them were able to establish a plant.
In 2007 the government took a decision to lease the site, comprising 473.5 hectares to the company running for a period of 26 years to construct a third cement factory in the country. According to the company, the government had subleased the site to M/S Larfarge Group commonly known as Hima Cement Ltd. In 2005 the company met officials from the ministries of Energy and Mineral Development, Finance, Tourism and Defence, who gave them full support of the project to start mining.
Presidential approval
In 2006 the company officials met President Museveni and gave him their business proposals. According to the company on August 3, 2006, President Museveni directed the relevant ministry officials to expedite facilitation of the establishment of the factory.
In January 2007 the company obtained a mining lease and land title for the site. The government provided it with incentives such as tax holiday for 10 years.
The company claimed it cleared all the necessary fees for processing the lease and was set to embark on the project which was to cost over $60 million.
However government, in April 2007 cancelled the lease giving it back to Hima Cement Ltd.
On May 7, 2007, President Museveni wrote to the company management confirming the lease cancellation. The company contended its agreement with government required compensation in case of breach of the contract.
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