Court Orders Uganda Sugar Board’s Establishment, Cancels Licenses of Illegal Sugar Mills

The High Court of Uganda, Civil Division, has delivered a judgment in favor of the Uganda Sugar Manufacturers Association (USMA) in its judicial review case against the Attorney General, the Ministry of Trade, Industry, and Cooperatives (MTIC), and two private companies, CN Sugar Ltd and Shakti Sugar Ltd.

The case centered around the alleged illegal issuance of sugar mill licenses and the failure to establish the Uganda Sugar Board (USB), as mandated by the Sugar Act.

The USMA had sought legal intervention, claiming that the MTIC had breached its statutory duties by failing to establish the USB, which is responsible for regulating the sugar industry and issuing licenses. Instead, the MTIC had issued Letters of No Objection (LONOs) to CN and Shakti, allowing them to operate sugar mills unlawfully.

The court found that the MTIC’s actions violated both statutory requirements and government policy. The Sugar Act mandates the creation of the USB to oversee sugar mill operations, but the failure to operationalize this body had a direct impact on the licensing process.

The court further noted that there was a government policy that required sugar factories to be spaced at least 25 kilometers apart, a policy later amended to 50 kilometers by a presidential directive. However, the mills operated by CN and Shakti were situated within these prohibited zones, undermining the regulatory framework designed to protect the industry and the public.

In its ruling, the court declared the LONOs issued to CN and Shakti invalid, effectively canceling all licenses granted without proper authorization. It also issued a mandate for the MTIC to establish the Uganda Sugar Board within three months to ensure proper regulation and licensing of sugar mills in the country.

Additionally, the court ordered CN and Shakti to halt operations until they obtain proper licenses and directed the Inspector General of Police to remove the mills from the restricted zones.

The court also awarded costs to the USMA, which will be shared equally among the respondents. The ruling serves as a significant step in ensuring compliance with Uganda’s legal and policy frameworks governing the sugar industry, aiming to restore order and transparency in the licensing process.