Home Business Govt clashes with Naguru-Nakawa estate developers over sh175B compensation claims

Govt clashes with Naguru-Nakawa estate developers over sh175B compensation claims

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Opec prime Properties Limited and Opec prime Uganda Limited, the developer of the Naguru-Nakawa estate, have written to the Government demanding compensation of $47m (about sh175b).

The developer reportedly presented the claim after the Government parceled part of the project land in Nakawa and allocated it to Aga Khan Development Network for the development of a University Teaching Hospital, four years before the Government cancelled the whole contract for nonperformance.

According to sources, the compensation was dependent on expenses incurred by the project developer on site and any other related costs resulting from the surrender of Nakawa land. However, the two parties have since disagreed on the figures after the developer reportedly failed to provide proof of their expenditures and their audited books of accounts.

The developer has since taken government to court.

“Given the failure by the developer to submit evidence of expenses incurred on the Nakawa project land, as well as government’s view that the claimed subsidy compensation was not a cost to the developer, the compensation assessment committee was constrained to return an opinion of value for the reasonable compensation due to the developer,” Benna Namugwanya, the KCCA  state minister and coordinator of the compensation assessment committee, said.

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Namugwanya presented the statement while appearing before the parliamentary committee on physical infrastructure committee, investigating government’s delay to develop the area. Namugwanya informed MPs that the giveaway of the Nakawa project land necessitated the signing of addendum No.2 between the developers and the Government, which spelt out the modalities for ceding part of the project land.

The Government later set up an inter-ministerial committee to renegotiate the public private partnership agreement signed in 2007 based on the Naguru project land alone. Namugwanya argued that clause 5 of the addendum obligated the Government to make reasonable compensation for the expenses incurred by the developer on Nakawa land, but also obligated the developer to develop the remaining part of the Naguru land in accordance with the orginal agreement and addendum No.1. Namugwanya said in breach of the agreement, the developer did not prioritise the building of the dedicated units, but resorted to constructing town houses and prime villas in total disregard of his obligation.

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In August last year, following slow development of the project, the Government, through the Prime Minister, set up an interministerial committee, which recommended termination of the agreement on grounds of failure by the developer to deliver the residential units, inability to fi nance the project, failure to appoint an independent certifi er and failure to pay ground rent.

The agreement was terminated in August this year and all the land titles for the Naguru-Nakawa estate registered under the developer were cancelled. In April, after nine years, the former Naguru-Nakawa tenants petitioned Parliament demanding to know why government had delayed to develop the area as agreed. They demanded that the Government reverts the land to them for development and be compensated sh15m each.

However, according to the lands minister, Betty Amongi, when the government technical team went on the ground, they reportedly failed to give the compensation committee a value since the houses the former tenants were occupying and the land belonged to the Government.