NEWS– Despite the red flags raised by the Parliamentary Budget Office, cautioning MPs against approving the UGX 508.44 billion loan for the construction of the 97Km Lusalira-Nkonge-Ssembabule Road, Government has defended the proposal saying the road is part of the infrastructure meant to facilitate Uganda’s oil production.
Leading the defending was Minister of Finance, Matia Kasaija while appearing before Parliament’s National Economy Committee last week, who argued that the objective of the road project is intended to support efficient development and production of strategic national resources, reduce travel time and lower freight transportation cost along the national road network.
“But the main emphasize for that road is the oil road, to support our oil business and promote equal access to socio-economic development across the country and by doing so, enhance Government efforts for poverty eradication and economic development. At the local level, the objective are; to improve access to goods, passenger transport reduce transport cost along the route and encourage access to economic development opportunities along the route by providing high capacity road infrastructure,” said Minister Kasaija.
Katumba Wamala, Minister of Works and Transport also appealed to the Committee to approve the loan arguing, “This is one of the roads that will facilitate the oil pipeline, from where we have done the roads and also joining Masaka-Mutukula Road. So it is a very important road in not only connecting the area, but also facilitating the oil. This is one of the projects which has been lucky in a way that before it goes into construction, the land acquisition has been done because that has usually been our challenge.”
Minister Kasaija explained that total project cost will cost UGX534.9Bn, and this is exclusive of Value Added Tax, and of this amount, UGX479.88Bn will be funded by Citi Bank and UGX55.1Bn will be funded by Government and on top of that, Government will also be responsible for any taxes that may or will arise under this loan.
“The road will provide an alternative route connecting the Northern corridor routes of Kampala to Masaka and Kampala to Mubende to Fort Portal, there by easing connectivity from the Central region to the Albertine region. The road will also improve access to rural economically productive areas and thereby, contribute to socio-economic development poverty reduction, and stimulate and support local economic activities by reducing transport costs and travel time along the existing gravel road,” remarked Minister Kasaija.
The two Ministers’ defending of the Loan comes at the time the Parliamentary Budget Office described the loan as highly commercial and would burden Ugandan taxpayers with a total of UGX 808.3 billion, meaning Uganda would pay an interest of UGX300Bn, but that cost would go higher, given the UGX141.47Bn cost to be borne by taxpayers in taxes tagged to this loan.
Documents before Parliament indicate that the loan request followed a commercial contract signed between the Uganda National Roads Authority (UNRA) and M/S Technovia S.A, in a joint venture with Technovia Angola, on 12th September 2022 to undertake the design and build of the road, with the commencement of civil works expected to start upon the signing of the financing agreement.
This prompted Stella Atyang (Moroto DWR) to raise suspicion on why UNRA committed Government to such a contract without establishing the source of funds, wondering whether the provisions in the Public Finance Management Act have been discarded, because there are similar loans of this nature that Parliament has got to handle lately.
“The agreement between the contractor and UNRA was done in September 2022, and the Ministry is here seeking approval for the loan yet in the Public Finance Management Act, states that Government has to secure money first, before entering into an agreement with the contractor. And it seems it is becoming a common practice, in most of the contracts that are signed between Government with the contractors. Why has it taken long for us to change the law so that we don’t keep violating the law?” noted Atyang.
