Published on 06/08/2024
Despite the Parliamentary Budget Office’s warnings about the UGX 508.44 billion loan for the construction of the 97-kilometer Lusalira-Nkonge-Ssembabule Road, government has strongly defended the proposal, emphasizing the road’s strategic importance for Uganda’s oil production.
Finance Minister Matia Kasaija argued that the road is crucial for Uganda’s oil sector, promising to cut travel time and freight costs. He emphasized that it would bolster socio-economic growth nationwide. Despite the controversy, the government believes the investment is essential for the country’s strategic interests and future development.
“The primary focus of this road is to support our oil industry and promote equitable access to socio-economic opportunities. By providing high-capacity road infrastructure, we aim to reduce transport costs, enhance passenger transport, and stimulate local economic activities,” said Kasaija.
Read Also: Taxpayers To Bear UGX 300Bn Interest Burden For Proposed Lusalira-Nkonge-Ssembabule Road Loan
Works and Transport Minister Katumba Wamala also advocated for the loan’s approval, emphasizing the road’s role in facilitating the oil pipeline and connecting vital routes. “This road is crucial not only for connecting the area but also for supporting the oil industry. Land acquisition, which often poses challenges, has already been completed for this project,” Wamala noted.
Kasaija explained that the total project cost is UGX 534.9 billion, excluding Value Added Tax. Of this amount, UGX 479.88 billion will be funded by Citi Bank, while UGX 55.1 billion will be covered by the government, which will also bear any associated taxes.
“The road will offer an alternative route connecting the Northern Corridor routes of Kampala to Masaka and Kampala to Mubende to Fort Portal, thereby improving connectivity from the Central region to the Albertine region. It will also enhance access to economically productive rural areas, contributing to poverty reduction and local economic development by lowering transport costs and travel time,” Kasaija remarked.
The defense of the loan by the two ministers comes amid concerns from the Parliamentary Budget Office, which described the loan as highly commercial and burdensome for Ugandan taxpayers, who would end up paying a total of UGX 808.3 billion, including UGX 300 billion in interest and UGX 141.47 billion in taxes.
Documents before Parliament reveal 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 September 12, 2022. Civil works are set to begin upon the signing of the financing agreement.
MP Stella Atyang (Moroto DWR) raised concerns about UNRA committing the government to the contract without securing the necessary funds, questioning whether the Public Finance Management Act’s provisions are being disregarded. She also pointed out significant variances in the cost per kilometer compared to the Masaka-Mutukula Road project, suggesting potential mismanagement or financial diversion.
“The agreement between the contractor and UNRA was done in September 2022, yet the Ministry is now seeking approval for the loan. The Public Finance Management Act requires securing funds before entering into agreements with contractors. This practice seems to be becoming common, and it raises questions about adherence to the law,” Atyang noted.
Atyang also questioned the road’s estimated lifespan of 20 years, given the poor performance of similar projects, such as the Napak-Moroto road, which deteriorated significantly within just five years.
Read Also: Taxpayers To Bear UGX 300Bn Interest Burden For Proposed Lusalira-Nkonge-Ssembabule Road Loan