The Observer (Kampala)

30 January 2013

Uganda: Court Throws Out Shs40 Billion Kilembe Case

When President Museveni arrives in Kasese today to celebrate 27 years since he took over power, the public will be looking for signs of government's commitment to revive Kilembe Mines Limited (KML), a company that once defined the region.

Many people in Kasese have waited for KML, the copper company that was once a beacon of hope for much of western Uganda, to reopen after it collapsed more than 30 years ago. That wait, however, could soon come to an end after court made a crucial ruling on a case that was part of a wider stumbling block to plans to reopen KML. The commercial court on Friday dismissed a case in which a Canadian company, CANAF Group, sought a court order to block the ongoing privatization of Kilembe Mines Limited.

CANAF, which was formally known as Uganda Gold Mining Ltd, through its lawyers MMAKS advocates, had also asked court to order both the Attorney General and KML to enforce an order which necessitated Uganda Gold Mining to re-enter Kilembe Mines, seven years after abandoning the site. Uganda Gold Mining had also presented a claim of $15m (roughly Shs 40bn) as out of court settlement to drop interest in copper mines.

Justice Christopher Madrama Izama in his ruling said, "The order sought would interfere with the privatization process prescribed by Parliament on the basis of an agreement to which the government is not party. The state is entitled to carry out the privatization process under the Public Enterprises Reform and Divestiture Act cap 98 laws of Uganda." He dismissed the case with costs.

Commenting on the ruling, the Privatisation Unit Spokesperson, Jim Mugunga, said that as a department of government, they were elated by the judgment.

"We now look forward to ensuring a speedy divestiture of Kilembe Copper Mines. This long-standing case has been one of the major stumbling blocks hindering revamping Kilembe Mines. Yes there have been frustrations and the President has openly voiced his concerns."

Mugunga noted that Uganda would have lost almost Shs 40bn if the PU had not taken precaution on the case. "Given well- documented incidents where government has persistently lost cases, it is refreshing to note that some public servants still have what it takes to save taxpayers' money," he observed.

Museveni, while recently addressing the NRM Members of Parliament at Kyankwanzi, blamed "timid political elements and indifferent, if not compromised civil servants" for the delays to revamp and upgrade Kilembe Mines.

Meanwhile, in a related development the Cabinet Subcommittee on Privatisation, the Divestiture Reform and Implementation Committee (DRIC), has approved a list of five shortlisted bidders for Kilembe Mines Ltd and recommended them to proceed to the final stage of the divestiture process.

The bidders, who will now be required to submit detailed technical and financial proposals, are Sino-Steel (China), Tibet-Hima Group (China), Konkola Copper Mines PLC (Zambia), Shree Minerals (Australia) and Gingko Energy Investments Co. (China).

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