Uganda’s Push for a Sh2.6 bn Tax Waiver Signals a New Chapter for Kilembe Copper Operations

The Ministry of Energy and Mineral Development has formally requested a waiver of Sh2.6 billion in unpaid mineral rent from Kilembe Mines Limited, a state‑owned entity that is currently being wound up. The move, presented to the Committee on Finance, Planning and Economic Development on 12 August 2026, is intended to clear the financial slate before a new consortium takes over the historic copper concession.

Why the waiver matters

Under Section 189 of Uganda’s Mining and Minerals Act (Cap. 159), every licence holder must remit an annual mineral rent before the right is granted and on each anniversary thereafter. Kilembe Mines, which inherited the licence after the collapse of Tibet‑Hima Limited in 2017, fell behind on these payments. The Auditor General’s 2024 report flagged the arrears and advised the accounting officer to consider writing them off.

State Minister for Minerals Hon. Sidronius Okaasai explained that the outstanding sum represents the cumulative rent due while Kilembe Mines held the licence, even though the company’s exploration permits expired in 2022. “We are seeking the committee’s approval to write off this debt as we transition the licence to the new contractor,” said Agnes Alaba, Commissioner for Geological Survey and Minerals.

A new partnership on the horizon

In 2025 the Ugandan government signed a fresh mineral production‑sharing agreement with a joint venture comprising Sarrai Group Ltd, Nile Fibreboard Ltd and Uganda National Mining Company Ltd. The consortium is tasked with exploring, developing, and eventually processing copper at Kilembe, with a production target set for 2029. By removing the legacy debt, the ministry hopes to make the project financially attractive and avoid the bureaucratic drag that plagued previous operators.

Local concerns and political push‑back

While the waiver could smooth the path for the new venture, it has sparked debate among lawmakers. Hon. Dicksons Kateshumbwa, representing Sheema Municipality, urged the ministry to accompany the financial relief with a robust environmental mitigation plan, citing past floods that disrupted both Tibet‑Hima and Kilembe’s operations. Similarly, Hon. Joanne Okia, Woman Representative for Madi‑Okollo District, warned that the winding‑up of Kilembe Mines could jeopardise jobs for Ugandans unless the new operator commits to local employment.

Opposition voices were also heard. Hon. Patrick Nsamba Oshabe (NUP, Kassanda County North) questioned the timing of the waiver, asking why the ministry would seek a write‑off while the winding‑up process was still underway. “Kilembe Mines is not a party to the new production‑sharing agreement,” he remarked, suggesting that fiscal concessions should not be granted prematurely.

Implications for Uganda’s mining sector

The Kilembe case illustrates a broader challenge for Uganda: balancing the need to attract foreign investment in its mineral sector with the imperative to enforce fiscal discipline and protect community interests. If the waiver is approved, it could set a precedent for how legacy state‑owned mines are handled during privatization or restructuring.

Conversely, critics argue that forgiving large sums of tax debt may send a signal that the government is willing to overlook compliance failures, potentially undermining future revenue collection. The outcome of the committee’s deliberations will therefore be watched closely by both investors and civil‑society groups.

Regardless of the decision, the transition at Kilembe marks a pivotal moment. A successful handover to the Sarrai‑Nile‑UNMC consortium could revive a once‑vibrant copper hub, generate export earnings, and create skilled jobs in western Uganda. Failure, however, could reinforce scepticism about the government’s ability to manage large‑scale mining projects effectively.

The ministry has indicated that, pending approval, the waiver will be processed alongside the formal transfer of the licence, which is expected to be completed by the end of 2026. Stakeholders across the political spectrum will continue to monitor the process, aware that the stakes extend far beyond a single balance‑sheet entry.