The Executive Director of Uganda National Roads Authority- UNRA, Allen Kagina has told MPs that the Authority pays 342 million Shillings in interest daily to unpaid project contractors.
Kagina was on Tuesday appearing before Parliament’s Finance Committee in regard to the impact of inadequate cash limit for the half year of the financial year 2022/2023.
In her presentation, Kagina noted that in the last financial year 2021/2022, UNRA was appropriated a total of 3.654 trillion Shillings for development and maintenance of the national road network, with financing from government amounting to 2.159 trillion and 1.495 trillion in external financing for projects directly supported by development partners.
She said that out of the 2.159 trillion government financing, 1.655 trillion was released and that the Authority closed the financial year with total arrears amounting to 528.5 billion, including 89.57 billion under road maintenance.
For the current financial year, UNRA says that the cash flow requirement for the first and second quarter was 1.249 trillion, but was only provided with a cash limit of 689.8 billion by Ministry of Finance, leaving a different of 559.9 billion.
“Out of 1.005 trillion cash requirement inclusive of debt under development expenditure, inclusive of land acquisition, only 503 billion has been released by Ministry of Finance,” reads part of the UNRA documents.
Kagina says that some of the anticipated impact of the minimal releases is the failure to pay a debt amounting to 202.87 billion and nugatory expenditure in interest expenses, idle equipment and reduction in works by the contractors.
Also reported is the failure by the Authority to acquire land in time, increased cost of land acquisition arising out of reassessment due to obsolete compensation awards which have to be updated, failure to meet financing conditions for effectiveness of donor funded projects, among others.
Kagina also says that the budget shortfall on development expenditure will led to failure to sign contracts whose procurement has been completed.
“A number of procurements for contracts have been completed but contracts cannot be signed due to shortfall in funding. These include civil works for rehabilitation of Karuma Olwiyo (43.5Km), supply and delivery of emergency boats for supporting ferry operations, works for construction of high speed weigh in motion lanes, station and parking yard at Kamdii weigh station,” said Kagina.
She emphasized the need to pay off the debt in order to stop any more accumulation and interest payment.
Following her presentation, MPs expressed concern about government’s daily interest payment of 342 million on debt to contractors.
Enos Asiimwe, the Kabula County MP said there is need to clear the arrears to avoid any more loses to government. He also asked UNRA to explain how the interest is computed and the companies to which it is owed.
Paul Omara, the Otuke County MP, said 342 million in interest daily lost by the government is a huge blow to the economy.