25 May 2017

Uganda: Parliament Approves 5-Year Bujagali Tax Waiver

Parliament has passed a tax waiver for Bujagali power project for the next 5 years as opposed to the 15 years proposed by government.

Sometime this year, government through the minister of State for Planning, David Bahati proposed a corporate tax exemption for Bujagali hydro-power project up to June 2033 under the Income Tax Amendment Bill 2017.

According to the minister, the proposal was part of the measures being undertaken by government to reduce power tariffs and spur industrial growth in the country.

The proposal drew mixed reactions from legislators with some questioning the need for the amendment while others proposed that government buys off the Bujagali loans and takes over management of the dam.

While defending the proposal on Wednesday, Energy and Mineral Development minister, Irene Muloni, said the tax waiver will reduce power tariffs from $0.14 cents to $0.11 cents that will attract more investors because of cheaper power.

"When we have industries we are going to generate taxes, we're going to generate jobs. We're going to add value. The economy is going to improve. I want to further assure members that we're not looking at the industrialists alone. We are looking at the ordinary person as well and that is why we are going in for free connections. Yes, we want the ordinary person to enjoy electricity", said minister Muloni.

Some of the legislators proposed to reduce the tax waiver to 5 years subject to a review. Due to the varied opinions, the speaker Rebecca Kadaga, put the matter to a vote. The MP voted for a 5-year renewable tax waiver for Bujagali instead of 15 years as proposed by government.

At this point, Bahati informed parliament that the power tariff reduction will be effected at the start of the new financial year on July 1, 2017. He also promised to present to parliament the names of those who negotiated the Bujagali deal and those that signed the agreement on Thursday.

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