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KAMPALA â President Museveni has directed that the
Dairy Corporation Limited be given to a Thai businessman at a fee of only
one dollar.
Highly placed sources at State House said that the
President's directive was issued on Thursday last week.
Our
investigations show that the Privatisation Unit (PU), under the ministry
of Finance, Planning and Economic Development, scheduled the Dairy
Corporation for privatisation early last year.
Sources said
the exercise had reached the state of pre-qualifying bidders through
competitive bidding.
However, on
October 25, 2004, Vice President Gilbert Bukenya wrote the minister
responsible for privatisation, Prof. Peter Kasenene, saying: "His
Excellency the President has directed that Dairy Corporation should be
given to Malee Sampran Sampran Public Company Limited whose chairman is
Mr. Chatchai Boonyarat for a period of three years."
The letter
further says, "This is therefore to direct you to initiate the process of
drawing up the terms of the lease so as to finalise the lease agreement in
order to enable the Malee Company to commence operation by January
2005."
The PU
complied with the President's directive and drew up a draft agreement for
the lease to the Thai company.
However,
sources say, the PU drew up an agreement in which it required Malee to pay
a $1 million as lump some payment for the lease, then oblige the company
to pay a percentage of the profits from Dairy Corporation to the
government, and also to pay a yearly rental fee to the
government.
A highly
placed source at State House said that when the President learnt of the
requirements under the draft lease agreement, State House issued yet
another directive to the PU to remove all the payment provisions of the
draft.
Instead, the
source said, State House directed that Malee should only pay $1 (one
dollar) - a nominal fee - for Dairy Corporation, virtually handing the
corporation to the Thai businessman on a silver platter.
People
familiar with the transaction said that because of the State House
directive, Malee will take Dairy Corporation from the PU even without
presenting a business plan on what it intends to do with the corporation.
The only
promise the Malee chairman has made is that he will, within one year of
taking over the corporation, build a dairy plant in Mbarara from the
profits he makes.
The Sunday
Monitor has learnt that Malee chairman Boonyarat is not going to invest
here as Malee but will float a company locally to take over Dairy
Corporation.
"Yes, there
was a government directive to offer Dairy Corporation to Malee and the
[privatisation] minister can answer all the other details," said PU
Executive Director Michael Opagi.
Minister
Kasenene confirmed on Friday the details outlined here save for the
nominal fee. "We have not yet agreed on the figure, so the one dollar
price of Dairy Corporation is false. We shall negotiate with them on the
figure."
However,
sources close to State House maintained that the President's directive was
clear: Malee should only be charged a nominal fee, which is usually one
dollar.
Kasenene then
amended his statement and instead said the President directed that PU
"should not ask for a prohibitive figure that will frustrate the
investor".
However, when
asked why the President not only disregarded the competitive bidding
process but also issued a directive to PU that virtually arm-twists the
unit to offer a state owned enterprise to a private foreign investor at a
low price, Kasenene said: "That is his prerogative and I cannot comment on
it."
The PU
recapitalised the Dairy Corporation at Shs2 billion toward the end of 2003
to improve its performance, but Kasenene said: "In spite of
recapitisation, the Dairy Corporation was still struggling and it needs
more capital injection because the machines are old. We did not want to
put more money into it, but instead sell it off. It is a strategic
enterprise which if it collapsed, the farmers would suffer."
The Dairy
Corporation was established in 1967 as a parastatal in the ministry of
agriculture, animal industry and fisheries. In 1998, a new law was passed
separating the commercial from the regulatory and development functions of
the corporation.
The number of
farmers selling milk to the corporation rose from 3,280 in 1988 to more
than 13,000 in 2002. In return the corporation paid farmers Shs3 billion
in 2002 up from Shs105 million in 1988.
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