MPs question UGX. 57 billion payment to US company

Hon. Musasizi (L) making his presentation before the Budget Committee

Hon. Musasizi (L) making his presentation before the Budget Committee

Lawmakers have criticised a supplementary expenditure of UGX 57.6 billion under the Ministry of Energy and Mineral Development to cater for an out of court settlement to a United States based energy company, Albatross.

Members of Parliament on the Budget Committee made their reservations while receiving responses from the Minister of State for Finance, Planning and Economic Development (General duties), Hon. Henry Musasizi on the supplementary expenditure for Financial Year 2022/2023, Schedule one on Wednesday, 01 March 2023.

Musasizi said that in 2014/2015, government entered an implementation agreement with Albatros to establish a 50 megawatt thermal power plant in Hoima district, but production of oil and development of oil refinery delayed.

“Subsequently, government and Albatros mutually agreed to discontinue the project and reimburse the developer for expenses incurred in the development of the project process, retain the land and other assets of project.

He added that government found it costly and unsustainable to provide an annual subsidy of USD$ 74.5 million for the investor to use imported oil.

Committee Chair, Hon. Isiagi (R) chaired the meeting. On his right is the Deputy Chairperson, Hon.Wamakuyu Mudimi

Committee Chairperson, Hon. Patrick Isiagi however said that paying the energy company Shs57.6 billion under the supplementary expenditure approved within 03 percent of the budget was not necessary.
“If the Auditor General is keen on such expenditures, they will find them nugatory. As Parliament, we shall subject each of these expenditures to a test as to whether they qualify to be under the 03 percent and whatever does not qualify, we shall not be part of that dirt,” said Isiagi.

Hon. Gorreth Namugga (NUP, Mawogola South) said that out of court settlements do not qualify to be classified as unforeseeable and unavoidable, as defined in the Public Finance Management Act.

“This is a deal for some individuals to get money dubiously. My general observation is that supplementary expenditures under the legal 03 percent are questionable while those that require Parliamentary approval are genuine,” Namugga said.

She said that the expenditure of Shs57.6 billion is contrary to a commitment of the Charter of Fiscal Responsibility on efficiency, effectiveness and value for money.

Fox Odoi (NRM West Budama North East County) questioned how an expenditure on an out of court settlement takes precedence over public debts.

“Do you think that expenditure meets legal standards in the Public Finance Management Law,” Odoi asked.

Dickson Kateshumbwa (NRM, Sheema Municipality) said that supplementary expenditures should focus on provision of social services to the population, as opposed to out of court settlements.
“You are collecting money from tax payers and basic services are not catered for in the supplementary. How do you convince them to pay more taxes, people are always questioning what the taxes are used for,” Kateshumbwa said.

Parliament approved a total budget of Shs48.130 trillion for financial year 2022/2023.

Subsequently, the Minister of Finance laid before Parliament supplementary expenditure amounting Shs2.386 trillion for financial year 2022/2023, out of which, Shs1.316 trillion is within the 03 percent legal limit while Shs1.071 is under prior approval by Parliament.


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