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Let textile mill collapse, say parliamentarians
24
Mar '10
A private textile company, in which the Ugandan government has a good amount of shareholding is on the verge of collapse and could close down any time. This fear was echoed by the government in parliament.

However, parliamentarians say that, other shareholders who own 21 percent of Phenix Logistics Ltd, in which the government has the rest of the 79 percent stake, were unwilling to commit funds to run and manage the textile mill.

The government has put across a proposal to inject Shs1.3 billion into the company in the Parliament. Giving reasons, the government said that the firm was seriously impacted by the economic crisis and needs to be saved, lest it collapse.

Earlier, in 2000, the Uganda Development Bank lent the company Shs4.2 billion, which the firm was not able to repay and with interest the whole amount accumulated to Shs5 billion by 2008.

On a request from Phenix Logistics the government converted the Shs5 billion into shares in 2008. But once again, within a year of writing off the debts, the textile enterprise has once more run in to a deep financial crisis.

A few of the Parliamentarians are not in favour of allocating more public money to Phenix Logistics as they will feel that it will be a case of throwing good money after bad and are in favour of the firm collapsing.

Fibre2fashion News Desk - India


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