British-American Tobacco Uganda Closes Down Jinja-Based Cigarette Factory
Posted on: Sunday, 3 July 2005, 09:00 CDT
British-American Tobacco Uganda closes down Jinja-based cigarette factory
KAMPALA, July 2 (Xinhua) -- British-American Tobacco Uganda ( BATU) has closed down its Jinja-based cigarette factory following the recent hike in excise duty on locally manufactured cigarettes.
This is the first time BATU suspends its operations since its establishment in 1928.
Under Uganda's new finance budget which starts on July 1, 2005, excise duty on softcap cigarettes increased from 19,000 shillings (10.63 US dollars) to 21,000 shillings (11.75 dollars) per mille ( 1,000 cigarettes).
"We have temporarily suspended manufacturing pending discussions which are already underway with the government. We can 't compete with the current smuggling rate while carrying such huge overheads," BATU head of corporate and regulatory affairs Jimmy Kiberu was quoted by local media on Saturday as saying.
Before the close of last financial year, BATU owned about 90 percent market share in cigarette sales. "Now a lot of the share is being lost to smuggling," Kiberu said.
After closing the Jinja cigarette factory, the Kampala leaf processing plant, the leaf centers in west Bunyoro-Mubende, north Kigezi and mid-north covering Apac and Kitgum, are remaining operational basically for export purposes.
Kiberu said prior to the budget, BATU made a submission to the finance and budget committee of Parliament, requesting the government to maintain the excise duty rate of previous year.
"Unless the duties are revised, BATU shall not reopen," he said, adding that "this is seen as a death knell for us the legitimate players. If we continue production, it shall not only affect us as BATU but also affect government revenue from cigarettes by about 39 percent."
He threatened that if talks fail, Uganda risked becoming a net- destination for smuggled cigarettes.
Source: Xinhua News Agency - CEIS
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