Kampala, Uganda – In a move that has raised eyebrows, Parliament last night approved an additional UGX 64.779 billion in insurance fees for the Chinese contractor, Chongqing International Construction Corporation (CICO), working on the Masaka-Mutukula Road project. This brings the total project cost to UGX 751.002 billion, up from the initial UGX 691.68 billion.
The approval was made despite recommendations from the Committee on National Economy to reduce the insurance costs by 40% through renegotiation with CICO. The committee had suggested approving only UGX 38.8 billion of the insurance costs, covering 60% of the loan facility provided by China, while exempting the 40% funded by the Ugandan government.
Deputy Speaker Thomas Tayebwa rejected the committee’s recommendation, arguing that rejecting the insurance component would necessitate recalling the entire loan. However, some MPs expressed concerns about the decision, citing the issue of unused loans and the accumulation of interest fees at the taxpayers’ expense.
Gorreth Namugga, MP for Mawogola South, criticized the Ministry of Finance for its inability to utilize previously approved loans, which continue to accumulate interest fees. “We must address the misuse of loans. We have undisbursed loans totaling close to UGX 14 trillion, yet taxpayers are burdened with interest fees. The Ministry of Finance must be held accountable for procuring loans they cannot utilize,” she said.
The National Economy Committee’s report revealed that the total cost of Sinosure Insurance for the project is UGX 64.779 billion, including UGX 54.331 billion for the Masaka-Mutukula road section and Masaka town roads, and UGX 10.448 billion for the Kikagate-Kafunzo road section.
The committee also 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). Despite these concerns, UNRA defended the need for full insurance coverage, arguing that it ensures Sinosure covers 100% of the contract price, guaranteeing that the contractor can continue work even if the Ugandan government delays payments.
