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Uganda Sango Bay Sugar Could Lose Part of its Land - Official (DJ)

Source: Dow Jones Newswires

Kampala, Uganda, Oct. 22 - Uganda's Sango Bay Sugar Estates could lose land which is currently not under sugar cane plantation as the government seeks to encourage speedy investment the sugar industry, an official with the state-run Uganda Investment Authority told Dow Jones Newswires Monday.

Sango Bay Sugar Estates owns up to 12,100 acres of land in the western Ugandan district of Rakai and has for the past two years been trying to rehabilitate its sugar plant and farmland to resume sugar output, but almost 60% of its land is still idle.

"We have held talks with the Ministry of Lands on the possibility of allocating part of that land to an alternative investor," the official told Dow Jones Newswires.

An official with Sango Bay Sugar estates told Dow Jones Newswires Monday that efforts to resume sugar production have been constrained by a delay in securing funding. The company has been trying to get a government-guaranteed loan to fasttrack the project and it expects to get funding and start output by 2009. It is expected to start with an initial output of around 35,000 metric tons a year and build to full-scale production in around three years.

The company has already rehabilitated around 4,000 acres of cane plantations and exports sugar cane to the Kagera Sugar Co. in neighboring Tanzania.

Ugandan sugar companies have faced the problem of lack of land for expansion. UIA says landowners in Uganda are unwilling to lease or sell their land to large-scale investors, preferring to practice subsistence agriculture.

Uganda's annual sugar output is less than local demand which always leaves a deficit of around 50,000 tons that is covered through imports. The country's three sugar producers all want to expand operations and boost output to exploit local and regional demand and export to the European Union.

Last year, Uganda produced up to 200,000 tons of sugar. This year's output is projected at 260,000 tons and data from the private Uganda Sugar Cane Technologists Association indicates that by August this year, the country's sugar output from the three main producers had reached around 150,000 tons.

USCTA said Uganda's annual sugar output is expected to hit 350,000 tons by 2010 when Sango Bay starts production.

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