Defiance or Legal Loophole? CN Sugar Factory Nears Completion Despite High Court Ban

By Swift Reporter

Namayingo District – A fresh legal and political storm is brewing in eastern Uganda after CN Sugar Limited resumed construction of its disputed sugar factory in Kifuyo Village, Bukooli South Constituency, despite an earlier High Court ruling that declared the project illegal and ordered its operations halted.

Investigations indicate that construction at the site is now nearing completion, with heavy machinery already installed and the facility reportedly about 90 percent complete. The development has reignited debate over enforcement of court decisions and the country’s commitment to the rule of law.

Background to the dispute

The legal battle began when the Uganda Sugar Manufacturers Association (USMA), representing major industry players including Kakira Sugar Works, Kinyara Sugar Works, Sugar Corporation of Uganda Limited (SCOUL), Bugiri Sugar Ltd and Sango Bay Estates, challenged the licensing process that allowed CN Sugar Limited to establish a mill in Namayingo District.

In Miscellaneous Cause No. 195 of 2024, USMA sued the Attorney General, the Minister of Trade, Industry and Cooperatives, CN Sugar Limited and Shakti Sugar Limited, arguing that government officials issued “Letters of No Objection” instead of lawful licences required under the Sugar Act.

The association maintained that only the Uganda Sugar Board has the legal mandate to license sugar mills, but the board had not yet been operationalised at the time the permissions were granted.

Court findings

In a landmark ruling delivered on January 20, 2025, Justice Dr. Douglas Singiza Karekona ruled that the licences issued to CN Sugar and Shakti Sugar were unlawful.

The court held that, under Section 7 of the Sugar Act, licensing authority rests exclusively with the Uganda Sugar Board. In the absence of a properly constituted board, neither the ministry nor other government agencies had legal powers to authorise new sugar mills.

Justice Singiza further ruled that failure by the Minister of Trade to operationalise the Uganda Sugar Board amounted to a breach of statutory duty.

The court also reaffirmed the National Sugar Policy’s 25-kilometre zoning restriction, which prohibits establishment of sugar mills within close proximity to existing factories. Evidence presented showed CN Sugar’s factory lies approximately 19 kilometres from another mill, placing it within the prohibited zone.

In one of the ruling’s strongest statements, the judge declared that the Letters of No Objection had no legal standing and could not substitute lawful licences.

Orders issued

The High Court issued several directives, including cancellation of all permissions granted to CN Sugar, suspension of milling operations, and a restraining order against further construction.

The court also ordered the Inspector General of Police to remove mills erected in prohibited areas and directed government to constitute the Uganda Sugar Board within three months.

Stay of execution and renewed activity

Following the ruling, CN Sugar obtained a stay of execution pending appeal, temporarily suspending enforcement of the court orders. However, the company’s decision to continue construction has sparked criticism from legal observers and industry stakeholders.

Sources in Namayingo allege that local mobilisation efforts have intensified, with groups reportedly organising demonstrations in support of the factory and calling for government intervention to allow the project to proceed.

Legal analysts note that while a stay of execution pauses enforcement measures, it does not overturn the court’s findings unless a higher court reverses the judgment.

Wider governance questions

The controversy has raised broader concerns about regulation within Uganda’s sugar industry. Analysts argue that delays in establishing the Uganda Sugar Board created a regulatory vacuum that allowed administrative approvals to replace formal licensing procedures.

The situation now presents difficult questions for policymakers, including whether zoning rules remain intact, whether licensing laws have changed, and how court decisions should be enforced when large investments are already underway.

A test for the rule of law

As construction structures continue to rise in Kifuyo Village, the dispute has evolved beyond a single factory project into a national debate about governance, investment regulation and judicial authority.

For residents and industry players alike, the unfolding events in Namayingo are increasingly seen as a critical test of whether legal rulings will ultimately prevail over political and economic pressure.