The most recent Auditor General’s report for the fiscal year 2022–2023 disclosed a daily loss of 2.2 billion Shillings, which was covered by interest charges on project contractors’ overdue payments.
The Uganda National Roads Authority (UNRA) and the Ministry of Works and Transport have financial statements that show 804.26 billion Shillings in unpaid payments, according to the audit report that Auditor General John Muwanga submitted to Parliament this week.
Of the 804.26 billion, UNRA receives 588.77 billion, while the Ministry of Works and Transport receives 215.49 billion.
As of June 30, 2023, these amounts correspond to a daily interest payment of 1.61 billion by UNRA and 590.38 million Shilling by the Ministry of Works and Transport.
Long-term outstanding payables are a sign of inadequate budgeting, and they increase the possibility of legal action and the need to pay interest penalties for late payments.
For instance, UNRA settled interest payments totalling 11.93 billion for Interim Payment Certificates (IPCs) that were not made within the prearranged time frames.
The audit report states, “This was attributed to inadequate budget provisions for settlement of domestic arrears.”
The Executive Director of UNRA, Allen Kagina, had explained to Parliament in November 2022 that unpaid contractor debts had been building up for years.
She continued by stating that at the end of the fiscal year 2021/2022, there were 528 billion in arrears, up 145.75% from 215 billion at the end of the previous fiscal year.
“This is largely attributed to the budget suppression at 77% of the approved Government of Uganda budget that was released,” Kagina continued.
She warned that if the debt is not paid, they would be responsible for non-essential expenses such as interest costs, idle equipment, and a reduction in the contractors’ work.
To obtain additional financing for the settlement of these domestic arrears, Auditor General Muwanga instructed the accounting officers to communicate with the Ministry of Finance.
The Auditor General is also investigating commitment fees that resulted from delayed development partner loan absorption.
“I reviewed the total cumulative disbursements for three donor-funded road projects carried out by UNRA: the Kampala-Jinja Expressway (KJE) Project, the Kabale-Lake Bunyonyi/Kisoro-Mgahinga Roads Upgrading Project, and the North Eastern Road-Corridor Asset Management Project (NERAMP).” I also noted that, as of June 30, 2023, there were US dollars 458.759 million in total in undisbursed loan funds.
According to the audit report, “long approvals of project activities by the development partners and delays in procurement processes were the main causes of this.”
According to Muwanga, from the projects’ start dates, the government has accrued commitment fees totalling US dollars 10.63 million on undisbursed donor monies as a result of the undisbursed loan funds.
He suggested that the Accounting Officer get in touch with development partners and other relevant parties to devise strategies to shorten the time it takes to approve project activities and hire contractors for civil works projects.
The audit also reveals that despite a 13.83 percent increase in income, Uganda Railways Corporation has experienced large losses for the past two years, up 9.2 percent from the loss of 32.22 billion the year before.
“The Corporation also suffered a loss as a result of material or equipment theft on the Tororo-Gulu Railway line rehabilitation, valued at US$3.761 billion and euros 3.083 million,” the audit report continues.
According to Muwanga, this shows flaws in the business’s operations, profitability, and capacity to continue providing services.
He exhorts the Corporation to come up with plans to increase the potential for revenue generation.