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Ugandan Bank to Enforce Tri-Star Terms

Published date:
Tuesday, 18 November 2003

THE Uganda Development Bank (UDB) will not re-schedule the Apparels Tri-Star loan repayment portfolio, the bank's executive in charge of investment, Dr. A.K. Apiah, confirmed yesterday.

The bank is administering the loans from the Government estimated at US$3m (sh6b).

Tri-Star got a loan of US$2.5m (sh5b) from UDB and an additional $500,000 (sh1b) from the same bank with the Government as guarantor.

Apparels Tri-Star's managing director Veluppillai Kananathan has persistently pleaded with the bank to re-schedule the loan repayment, saying transport costs from Mombasa to Kampala have eroded their earnings and they were finding it difficult to sustain operations as well as service the loans.

State minister for investments Sam Kuteesa told MPs last week that the Government was subsidising transport for Tri-Star with the provision of the Uganda Railways facilities.

"We are not re-scheduling the repayment and since they defaulted, their principal will certainly become higher," Apiah said.

He said UDB was not the lender. "We are only administering the loans on behalf of the Government. And we shall do exactly that," he said.

Kananathan said it was important to waive interest accruing from the loans because he could not pay.

He said the project was set up for the mutual benefit of the Uganda government and him, adding that the bank should give him time to sort out his financial situation.

He argued that repayments would further burden the sustainability of the project.

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