Uganda Parliament: Seeks Approval to Write Off Kilembe Mines Debt

• The Ugandan government is seeking Parliament's approval to write off Shs2.297 billion in unpaid annual mineral rent owed by Kilembe Mines Limited.
• The Auditor General recommended writing off the debt, citing the company's failure to meet its obligations under the concession agreement.
• The proposed write-off is part of a broader government effort to revive copper production at Kilembe Mines.

The proposed write-off does not by itself clear the way for mining operations to resume, but forms part of the broader government effort to address outstanding issues surrounding Kilembe Mines as Uganda seeks to restore commercial copper production at the site.

Kilembe Mines Limited has accumulated a significant debt to the Ugandan government, with arrears totaling Shs2.297 billion in unpaid annual mineral rent. This amount represents the outstanding balance owed by the company between 2018 and 2024, as per the Ministry of Finance's records. The debt is a result of the company's failure to meet its obligations under the terms of its concession agreement with the government. The proposed write-off of this debt has sparked debate among lawmakers, who are now considering whether to approve the request.

The Auditor General's review of the Ministry of Energy and Mineral Development for the financial year ended December 2024 led to a recommendation that the outstanding annual mineral rent owed by Kilembe Mines be written off. This recommendation was based on an examination of the company's accounts and its compliance with the terms of its concession agreement. The Auditor General's findings have triggered a formal process for Parliament to determine whether the government claim against Kilembe Mines should be abandoned. The proposed write-off does not, however, clear the way for mining operations to resume at the site.

The proposed write-off of Kilembe Mines' debt is part of a broader government effort to revive copper production at the site. The government has signed a new mineral production sharing agreement with a joint venture involving Sarrai Group, Nile Fibreboard, and the Uganda National Mining Company. This agreement aims to revitalize the mine's operations and restore commercial copper production. However, the revival of Kilembe Mines remains a complex issue, with several challenges and disputes still outstanding.

Lawyers and compliance officers should watch for the potential precedent set by this proposed write-off, which may impact future government claims against mining companies in Uganda.

Source: Original reporting via Nile Post