Government Gets Green Light To Borrow UGX1.23 Trillion Loan For Vital Road Upgrades

Government Gets Green Light To Borrow UGX1.23 Trillion Loan For Vital Road Upgrades

By Spy Uganda

Kampala: Government has received the green light to finance major road works under the Upgrading of National Roads Project in Uganda, through loan funding worth US$325 million (Shs1.23 trillion).

This was during the plenary sitting chaired by Speaker, Anita Among, on Wednesday, 13 December 2023.

The loan will be secured from the Islamic Development Bank (US$295 million) and the OPEC Fund for International Development (US$30 million), whereas government is expected to provide US$22 million for land acquisition.

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The funding aims at rehabilitating the Masindi Port Bridge designed for 100 years of design life, as well as roads including Katine-Ochero road, Kiruhura-Bwizi-Rwamwanja-Kahunge road and Mpara-Bwizi road, each of which designed for 20 years of design life.

The Deputy Chairperson of the Committee on National Economy, Hon. Robert Migadde, observed that much as Uganda’s public debt remains within sustainable levels, the country is rated at moderate risk of debt distress.

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“The Committee recommends that the Minister for Finance renegotiates the risk premium to a lower rate and also have it fixed for the entire debt servicing period,” he said.

He added that ministries, departments and agencies (MDAs) should always undertake project designs prior to sourcing for money, in order to minimize project delays by effectively compensating project affected persons.

The House also authorized government to prefinance the reconstruction, rehabilitation and upgrading of major roads in Masaka and Ntungamo districts at a total cost of Shs691.6 billion.

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Under the prefinancing agreement, 89.5km of Masaka-Mutukula road will be reconstructed, 11km of Nyendo-Villa Maria road will be rehabilitated, 3.5km of access roads to Masaka UPDF barracks and to Masaka Industrial Park will be upgraded, whereas 28.5km of Kikagati-Kafunjo road will be improved.

In a Committee report on the prefinancing proposal, it was observed that the unit cost of a road under the project is valued at Shs5.08 billion per kilometer compared to Shs3.38 billion [for upgrading] as indicated under the annual budget performance report for financial year 2022/2023.

“The Committee recommends that given the high unit cost of construction, Ministry of Works and Uganda National Roads Authority (UNRA) should ensure that the contractor delivers the best quality bridges and roads in order to achieve value for money,” said Migadde.

The Committee also tasked UNRA to devise mechanisms to ensure implementation of ongoing projects is expedited, to minimize payment of commitment fees to various creditors.

Speaker, Among put the Minister for Works, Gen. Katumba Wamala to task over the slow progress of the Kampala Jinja Expressway project.

In June 2020, Parliament approved loan financing from the African Development Bank for the project worth US$229.47 million. However, only US$34 million representing or 0.10 per cent of the amount has been disbursed to date.

“This is a priority road. It takes you to borders to Kenya and South Sudan. Four years since Parliament approved the loan, nothing has taken place. How sure are we that the loans we are approving today are going to be utilized?” Among asked.

Gen. Katumba Wamala requested for time to present an update report on the project’s progress.

“The demands and requirements on that project are far much deeper and more complex than the Katine-Ochero road which is a straightforward project. I request to be allowed to bring more details as soon as the House resumes,” he said.

The Speaker also tasked the Committee to always follow-up on the status of implementation of projects under previous loans approved by Parliament.

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