KAMPALA – Auditor General John Muwanga has cautioned the government against the purchase of tycoon Patrick Bitature’s Electromaxx Thermal Power Plant, citing several reasons including indebtedness and legal disputes surrounding the company.
The Auditor General’s recommendation is contained in a special audit report on the technical, legal, and financial evaluation of the Electromaxx Thermal Power Plant and the modular mini-refinery facility directed by President Museveni.
“I noted that ELECTROMAXX is indebted to the tune of USD 13,978,900 and UGX.138,537,919 in regard to ascertained debts being taxed costs attendant to litigation; and unascertained debts of USD 1,412,477.76 relating to pending or threatened litigations. These may cause an impediment on the ability of ELECTROMAXX to transfer facility assets to Government,” the Auditor General wrote in a report to the Minister of Energy and Mineral Development.
“The settlement of the indebtedness of ELECTROMAXX in regard to litigations should be agreed between ELECTROMAXX and Government during the decision-making process,” he added after a comprehensive audit that sought to assess the legal, financial, and technical evaluation and further determine the status of the Power Plant and the Refinery to facilitate the Government decision on acquisition of the facilities.
The report also found out that the two leasehold land titles for plots 185 & 200 and plot 198 with a combined size of 4.209 Hectares (10.400 Acres) on which the thermal power plant sits are subject to a Mortgage to Barclays Bank (U) Ltd (Now Absa) under term loan facility of USD.10m.
“Government should ensure that the inventory ownership status is clearly resolved between ELECTROMAXX and the O&M Provider. In addition, modalities of how the Mortgage with ABSA Bank will be settled should be agreed between ELECTROMAXX and Government during the decision-making process,” the report adds in parts.
“It should however be noted that two freehold Land titles i.e., Tororo Block 5 Plot 1583 and Plot 1706 both situated at Asinget A Zone, measuring approximately 16.172 Hectares (39.96 acres) attributed to the refinery are not registered in names of Simba Oil Limited and Electro-Maxx Uganda Limited. Management has not explained why the titles are not registered in the project owners’ names. In addition, one piece of land measuring approximately 13.12 Hectares (32.42 Acres) is not registered and there are no documents of ownership availed to us,” the report further adds.
It adds: “Furthermore, ELECTROMAXX did not obtain Petroleum Refinery License and there was no indication that all development permits required by the Physical Planning laws including building and excavation permits were obtained. However, ELECTROMAXX indicated during discussions of my finding that the Government had given a green light to the Project, and they had applied for the refinery licence with the Ministry of Energy and Mineral Development. This creates legal and regulatory compliance risks for the project.”
This website understands that Mr. Bitature entered talks with the Ugandan government to sell his thermal Electromax power plant in Tororo District in a bid to bail himself out of a $30-million debt owed to South African lender, Vantage Capital.
Bitature, the group CEO of Simba Group— with interests in real estate, hotel and hospitality, telecom, oil and gas, and media, sought government assistance after being embroiled in a court battle with a South African lender over a loan repayment.
However, the bailout was a failure.
During a meeting with President Yoweri Museveni, Bitature floated the idea of the government acquiring the power plant, which is owned by Simba Group and operated by independent power producer Electro-Maxx Limited.
The 50-MW plant was built in 2012 under a build, own, and operate model to address low electricity generation and increasing demand in the country.
The president directed the ministries of energy and finance to continue discussions with Bitature to thrash out the finer details of the deal.
This website also understands that President Museveni in June 2022 directed the AG to evaluate ELECTROMAXX Thermal Power Plant and the Modular Mini-Refinery Facility located in Tororo owned by ELECTROMAXX and SIMBA OIL LIMITED with a view of a possible acquisition of the infrastructure by the Government.
ELECTROMAXX and SIMBA OIL LIMITED are both indigenous energy companies with innovative approaches to providing power, oil, and gas solutions to Uganda.
The Auditor General in his report confirmed that the audit was sanctioned by President Museveni.
Presently, the government has a power purchase agreement with Electromax, although the latter has scarcely supplied electricity to the national grid due to surpluses from hydroelectric generation.
Bitature, the newly appointed chairman of the board of Bollore Logistics Uganda, which has won a contract to handle the majority of logistics work for the company’s oil fields and pipeline in western Uganda, has recently been confronted with a number of financial issues.
According to a recent report, he has yet to repay a $10-million investment from Vantage Capital which has tripled in value to around $30 million, resulting in a legal battle over ownership of the Ugandan businessman’s Kampala properties.
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