Above The Law? CN Sugar Races To Finish Factory Court Ordered to be Demolished

CN Sugar Limited has continued construction of its sugar factory in Kifuyo Village, Bukooli South Constituency, Namayingo District, even after the High Court declared its licence illegal and ordered the removal of its mills from the area.

Sources familiar with the project say the facility is now approximately 90 percent complete, with heavy machinery already installed on site.

The development has reignited concerns about enforcement of court orders and the state of regulatory oversight in Uganda’s sugar sector.

Background

The legal dispute was initiated by the Uganda Sugar Manufacturers Association (USMA), whose members include Kakira Sugar Works, Kinyara Sugar Works, SCOUL, Bugiri Sugar Ltd, and Sango Bay Estates.

In Miscellaneous Cause No. 195 of 2024, USMA sued the Attorney General, the Minister of Trade, Industry and Cooperatives, CN Sugar Ltd, and Shakti Sugar Ltd, challenging the use of administrative documents known as “Letters of No Objection” (LONOs) to authorize the establishment of a sugar mill within 25 kilometres of an existing factory.

USMA contended that under the Sugar Act, only the Uganda Sugar Board (USB) has the legal mandate to license sugar mills. The association argued that the Minister had failed to constitute the Board and had instead permitted new entrants through informal administrative instruments that had no basis in law.

Court ruling

Justice Dr. Douglas Singiza Karekona delivered his judgment on January 20, 2025.

On the question of licensing authority, the judge ruled:

“It is the final determination of this court that, in the absence of a properly constituted USB, neither the MTIC nor UIA could validly issue any sugar and jaggery mills licences… The licences granted to CN and Shakti… are illegal and of no consequence.”

The court also found the Minister in breach of statutory duty for failing to set up the USB:

“It is thus the firm determination of this court that the failure to put the USB in place was a breach of a statutory duty by the MTIC… manifestly illegal.”

On the 25-kilometre zoning restriction contained in the National Sugar Policy 2010, the judge noted that evidence before the court showed the Kifuyo factory is located approximately 19 kilometres from an existing mill.

“The undeniable fact is that the policy prohibits the grant of any sugar mill licences within the prohibited spaces,” the ruling stated.

The court further dismissed the LONOs as having no legal standing.

“A public official ‘cannot put something on nothing and expect it to stay. It will collapse.’ In this case, LONOs were legally nothing and must collapse because they were unreasonably and wrongly used in the place of lawful licences from the USB.”

Justice Singiza proceeded to cancel all LONOs issued to CN, ordered a halt to all milling operations pending proper licensing, restrained the company from further construction, directed the Minister to constitute the USB within three months, and instructed the Inspector General of Police to remove CN’s mills from prohibited zones within 14 days.

Stay of execution

CN Sugar subsequently obtained a stay of execution pending appeal, which suspends the enforcement of the court’s orders while the case is heard at a higher level.

However, sources in Namayingo say the company has used the stay not merely to preserve the status quo but to push construction forward at an accelerated pace.

Reports also indicate that the company has mobilized local political figures and casual workers to stage public demonstrations in support of the factory, with placards calling on the government to intervene.

“They have decided to use politicians, RDC’s office and other local politicians to get what they want other than the law… Some politicians during campaigns wanted to bring the President there as an endorsement so they could use the visit to manipulate Justice Singiza’s January 2024 court ruling. But the President dodged them,” a source in the area said.

Legal position

Legal experts say that while a stay of execution pauses enforcement, it does not alter the substance of a judgment.

“While a stay of execution suspends enforcement pending appeal, it does not convert an illegal licence into a lawful one. The substantive findings of illegality remain unless overturned by a higher court,” a senior lawyer said.

There has been no gazetted amendment to the 25-kilometre zoning policy. Parliament has not passed any legislation authorizing the Minister to issue sugar mill licences in place of the USB. The High Court’s findings of illegality remain in force unless reversed on appeal.

Wider concerns

The case has drawn attention to what analysts describe as a regulatory vacuum in the sugar industry. The court found that the Minister’s failure to operationalize the USB created space for administrative instruments to be used as substitutes for lawful licensing, a practice the judge rejected.

CN Sugar Limited had not responded to requests for comment by the time of publication. Efforts to reach the Ministry of Trade, Industry and Cooperatives were also unsuccessful.

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