Aug. 15 (Bloomberg) -- Ugandan President Yoweri Museveni ordered that Madhvani Group, owner of the country’s biggest sugar producer, be allocated a piece of disputed land on which it plans to build a second factory to produce the sweetener.
Madhvani plans to spend as much as $70 million buying 40,000 hectares (98,842 acres) of land in the northern district of Amuru and building the plant. Politicians in the region want the deal blocked because the company didn’t negotiate directly with the local community, according to Simon Oyet, one of the lawmakers who opposed the purchase.
The dispute over the allocation must be resolved within three months, Museveni said in an e-mailed statement from his office in Kampala, the capital, yesterday.
Uganda is seeking to boost sugar output after prices for the sweetener more than doubled last month amid reduced cane supplies, forcing the government to abolish an import tax on the commodity to cover the shortfall. Madhvani unveiled plans for a second sugar plant in the country three years ago, prompting the rift with lawmakers in the region, which is recovering from a two-decade war with the Lord’s Resistance Army rebels.
Museveni also ordered that part of Mabira Forest Reserve, a rainforest about 55 kilometers (34 miles) east of Kampala, be given to Sugar Corp. of Uganda Ltd., the nation’s third-largest producer. The initial allocation of part of the forest to the company in 2007 led to protests in Kampala in which at least six people were killed, according to the Daily Monitor newspaper.
Sugar Corp. is jointly owned by the Mumbai-based Mehta Group and the Ugandan government. Environmental groups including Nature Uganda oppose the allocation of the land because the forest is home to endangered monkey species and 300 types of birds, as well as being a catchment area for Lake Victoria.
Kinyara Sugar Works Ltd., the second-biggest producer should get part of the land belonging to a government prison in the western region for cane growing, Museveni said.
Demand for sugar from neighboring countries including South Sudan and Rwanda has contributed to the shortage in Uganda, according to the government. Uganda consumed 346,000 tons of the sweetener last year and imported 130,000 metric tons, of which 67,000 tons was re-exported, according to the Uganda Sugar Cane Technologists Association.
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