Government is set to pay Shs240,900,000,000 ($66M) to businessman Patrick Bitature as a bailout from the loan demanded by South African Company Vantage Mezzanine Fund II.
In a sensitive revelation, cabinet members convened on Monday and unanimously passed a cabinet paper to give the green light to a Shs240 billion deal favoring Bitature’s Electromaxx Thermal Plant purchase. Notably, it is believed that this deal was brokered by Bitature’s personal friend, State Minister for Privatization and Investment, Evelyne Anite.
If the deal, as obviously expected, is passed by Parliament, the well-connected businessman will have solved all his financial burdens and uncertainties that had put at stake his entire known livelihood! The deal, according to the cabinet paper snippets in our possession, is disguised in a purchase by the government, of Bitature`s Electromaxx Thermal Plant premised in West Nile.
It is this thermal plant that the government has chosen to purchase, as a backup to the Umeme grid, but in total disregard of the Auditor General (AG)`s recommendation to the contrary. The AG, Mr. John Muwanga had based his advice on the heavily debt-impregnated Electromaxx, legal disputes and land issues surrounding the company reputation. But to bail him out of the quagmire, the government has ignored all for Bitature.
Patrick Bitature owes $35 million to his creditors of M/s Vantage Mezzanine Fund II Partnership. His efforts to have it quelled by Ugandan Courts failed, leading to an arbitration court away, in London. Here, he also lost and was ordered to proceed and pay up. It is at this trying moment that Bitature was supposedly saved by his close friend Anite, who offered to resurrect and broker the Government-Electromaxx deal.
In his report, the Auditor General offered a comprehensive analysis of the technical, legal, and financial aspects of the Electromaxx deal with the government, raising several red flags. The report explicitly cautioned government against proceeding with the purchase of the power plant, citing significant reasons including the hitherto ongoing legal disputes and indebtedness surrounding the company.
“I noted that Electromaxx is indebted to the tune of $13,978,900 and Shs138,537,919 in regard to ascertained debts being taxed costs attendant to litigation; and unascertained debts of Shs1,412,477.76 relating to pending or threatened litigations. These may cause an impediment on the ability of Electromaxx to transfer facility assets to the Government,” read the report.
It was also revealed that Electromaxx held significant debts amounting to millions of dollars, both as ascertained and unascertained debts, stemming from various litigation processes. This precarious financial situation, suggested the AG, could potentially hinder the seamless transfer of facility assets to the government. He further stressed the need for a resolution of the outstanding debts between Electromaxx and the government during the decision-making process.
Additionally, he highlighted the tangled web of land ownership, particularly in relation to the thermal power plant’s location, which is still subject to a mortgage with Absa Bank. The AG further counseled that the settlement of the indebtedness of Electromaxx in regard to litigations should prior, be agreed between the company and Government during the decision-making process, just in case they insisted on entering the risky deal.
Muwanga also called for clarity on land ownership and the resolution of the mortgage agreement with Absa Bank. Furthermore, he uncovered that Electromaxx had not acquired the necessary Petroleum Refinery License and had not complied with various required development permits, leading to potential legal and regulatory compliance risks.
The background to this ordeal laid in Bitature’s attempts to alleviate his financial troubles. The businessman, who serves as the group CEO of Simba Group, sought government intervention by selling them the Electromaxx Thermal Power Plant, in a bid to address his debt owed to South African lender Vantage Capital.
However, the hoped-for bailout took a dramatic turn when the Auditor General’s report cast serious doubts on the feasibility of the power plant acquisition. The report highlighted critical issues such as debt burdens, legal disputes, and questionable land ownership. Bitature’s financial woes had multiplied, with revelations of his failure to repay a $10 million investment from Vantage Capital, which has since ballooned to around $35 million.
This situation led to a legal battle over ownership of his assets as Vantage Capital sought to recover the unpaid debt. The situation escalated further when the International Chamber of Commerce Court of Arbitration in London, ruled against Bitature, ordering him to repay the hitherto contested loan to Vantage Capital.
The court ruling highlighted the complex nature of the dispute, stemming from Bitature’s alleged non-repayment of the loan. This turn of events plunged Bitature into a whirlwind of pressure, causing his financial standing to deteriorate even further. The legal battles and unresolved financial obligations have since put his reputation and business interests at stake, leaving him to navigate a precarious and uncertain future.