Published on 09/08/2024
Parliament last night approved an additional UGX 64.779 billion in insurance fees for the Masaka-Mutukula Road project raising the total cost to UGX 751.002 billion. The Chinese contractor, Chongqing International Construction Corporation (CICO) secured the loan but the decision sparked debate.
The Committee of National Economy had recommended approving only UGX 38.8 billion covering 60% of the loan exempting the 40% funded by Uganda. Despite this advice, Parliament opted to cover the full insurance, pushing project expenses higher than anticipated.
Committee Chairperson John Bosco Ikojo presented the report, recommending a reduction in insurance costs by 40% through renegotiation with CICO. This would have reduced the total cost, including VAT, to UGX 38,867,640,143. However, Deputy Speaker Thomas Tayebwa rejected this recommendation, arguing that rejecting the insurance component would necessitate recalling the entire loan.
Gorreth Namugga (Mawogola South) voiced concerns during the session, acknowledging the importance of road infrastructure but highlighting the issue of unused loans. She criticized the Ministry of Finance for its inability to utilize previously approved loans, which continue to accumulate interest fees at the taxpayers’ expense.
“We must address the misuse of loans. We have undisbursed loans totaling close to UGX 14Trn, yet taxpayers are burdened with interest fees. The Ministry of Finance must be held accountable for procuring loans they cannot utilize,” Namugga stated.
The National Economy Committee’s report revealed that the total cost of Sinosure Insurance for the project is UGX 64.779 billion. This includes UGX 54. 331 billion for the Masaka-Mutukula road section and Masaka town roads, and UGX 10.448 for the Kikagate-Kafunzo road section.
The Committee criticized the Uganda National Roads Authority (UNRA) for committing to the contract addendum with CICO before Parliament’s approval, which contravenes Section 23 of the Public Finance Management Act (PFMA). The Act prohibits entities from entering multi-year commitments without Parliament’s consent.
Despite these concerns, UNRA defended the need for full insurance coverage, arguing that it ensures Sinosure covers 100% of the contract price. This guarantees that the contractor can continue work even if the Ugandan government delays payments.
