Coffee deal: Pinetti signed deal as "witness" not investor

As local processors continue to debate the controversial Coffee Agreement that has caused public uproar,  available information shows that Enrica Pinetti, the foreign investor behind Uganda Vinci Coffee Company, signed the deal as a witness.

A leaked February 2022 Memorandum of Understanding (MoU) shows that the deal was signed by Finance Minister Matia Kasaija on behalf of government, in the presence of Ramathan Ggoobi, the Permanent Secretary of the Finance Ministry.

According to the MOU, UVCC is a limited liability company that is fully registered with its office at Plot 2, Summit View , Kololo in Kampala.

According to the document, the coffee processing facility will have a capacity of 60,000-tonne per annum

What has brought up the controversy however is that the MoU indicates that UVCC was granted exclusivity to buy all Uganda’s coffee even before the government can look at other players.

It states that: "GoU undertakes that it will take all reasonable measures to give priority of supply of coffee to the Company before registering any contract or acknowledging any arrangement for the export of Coffee beans…”

The deal with UVCC will be valid until 2032, if the operations are to kick off this year (2022).

In all its operation timeline, UVCC will not have to pay any tax according to the agreement.

Article 4.1.3 states clearly that, “for avoidance of any doubt, the company shall be exempt from corporate income tax for a period of ten (10) years; b enjoy duty-free importation of all Plant and machinery, motor vehicles, construction materials and equipment, packaging materials and any other materials for use of this project under the Easy African Community Common External Tariff (EAC-CET)”.

Article 4.1.4 goes ahead to say that, “If there is any change in law or change in tax which substantially alters the economic benefits accruing, the company may within one year from commencement of the deed (February 10) write to government in order to maintain the economic benefits of UVCC.”

The agreement also reveals that UVCC will receive an electricity subsidy so that the price they pay for electricity at the plant does not exceed $ 5 cents per unit.

Government is to also ensure a steady adequate water supply via pipeline to the plant at the company’s cost to enable its operations.

In the agreement, government committed to also construct an access road linking the plant to the main Jinja Road.

The agreement has been defended by the Permanent Secretary in the ministry of Finance, Ramathan Ggoobi, who said that deal is the best.

A section of Ugandans, including processors and other stake holders have vehemently rejected the agreement, saying that government just signed a death sentence for the local Coffee growers.

Appearing on NBS Television, MP Muwanga Kivimbi who is also the shadow finance minister said that there are issues to do with the investor and the Coffee Agreement as well.

“We are giving another agreement to this person (Pinetti), who already has an agreement of Lubowa Hospital. That agreement is probably in hell now,” Kivumbi said.

Dr. Fred Muhumuza, a senior economist at Makerere Union said that the biggest threat of the agreement is the economic threat.

“Anybody who wants to cripple your ability to fight starts with your economy. Unfortunately, we are doing this to ourselves,” Muhumuza said.