Africa-Press – Uganda. A costly legal battle that resulted in compensation of $12m (about Shs42b) has stalled the Sukulu phosphate and fertiliser project, according to Guangzhou Dongsong Energy Group Uganda, the project owners.
In 2017, Justice David Wangutusi, the former Commercial Court judge ruled that Weidong defrauded min of $9.7 million that arise from both investment and interest in the project and subsequently ordered him to pay her the money.
The directors of company deny any wrong doing stating that they refunded Fang Min’s money by depositing cash on her bank account in China.
The plant is expected to produce purely organic fertilizers on the local market with a target of 300,000 metric tonnes of fertilizers annually when commercial production starts.
Much as the company had endured the shocks that were caused by Covid-19 outbreak, their effort to set off has been impended by the law suit.
However Mr Lee, says that the company remains optimistic about the project and still work actively to rejuvenate it.
The compensation, which has forced the project owners to stop operations for at least two years now, threatens realisation of one of Uganda’s biggest multimillion-dollar fertiliser initiative. The project in Tororo District, Osukuru sub-county in eastern Uganda, was launched by President Museveni in 2018.
However, Mr Changmin Lee, the Guangzhou Dongsong Energy Group deputy general manager, said last week that whereas they remain optimistic, the costly court battle has not only eaten into the company’s finances but has also stalled the project, which is currently behind schedule.
“We are law-abiding and we believe that the judicial process will be fair to us and the future of the company,” he said.
In 2020, businesswoman Fang Min, acting through her lawyers led by Mr Ebert Byenkya successfully argued a case in which she had accused Guangzhou Dong Song Energy Group together with Uganda Hui Neng Mining, Mao Jie and Yang Junjia of fraudulent and unlawful expropriation of a 26 square kilometre-mineral site in Osukulu sub-county in Tororo District.
Ms Fang Min, who is also the proprietor of Fang Fang Hotel, successfully argued that Guangzhou Dong Song Energy Group had acted illegally when it transferred her shares in the assets of Uganda Hui Neng Mining.
Thus, she asked the court to award her $25m (94.2b) as compensation for loss of her business interest in terms of general and exemplary damages.
However, in a ruling dated January 24, 2020, Justice David Wangutsi, awarded Ms Fang Min damages worth $12m.
Guangzhou Dongsong Energy Group, according to Mr Lee has since appealed the $12m award and court is yet to fix the hearing of the appeal.
The court cases triggered a number of challenges, among which included suspension of financing by the project financiers.
In June 2019, the Industrial Commercial Bank of China, which had committed to finance the entire project, notified Guangzhou Dongsong Energy Group that it would not go ahead with its earlier commitment due to the need to lower overseas lending occasioned by the impact of Covid-19 and the company’s legal battle with Ms Fang Min.
The withdrawal has since starved the project owners of financing, who last month indicated were in search of financing partners and government intervention.
The Sukulu phosphate project had been projected to start production of fertilizers and related products about two years ago after completion of the $620m (Shs2.2 trillion) Sukulu Phosphate Comprehensive facility.
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