Uganda’s Parliament has directed the Uganda National Roads Authority (UNRA) to renegotiate a contract with Chongqing International Construction Corporation (CICO) for the reconstruction of the Masaka-Mutukula Road and the rehabilitation of various roads in Masaka District.
The key issue raised by lawmakers is the inclusion of a Shs 38.86 billion insurance fee from the China Export & Credit Insurance Corporation (Sinosure) in the contract. Parliament has recommended a 40% reduction in this insurance cost, which was initially set at 100% of the project’s value. The recommendation was part of a report presented by John Bosco Ikojo, the Chairperson of the Committee on National Economy, during a parliamentary session on August 8, 2024.
The Sinosure Insurance, required for Chinese investments abroad, is intended to ensure that construction can continue even if the Ugandan government faces payment difficulties. However, this fee was not included in the original loan agreement approved by Parliament in December 2023 for the Shs 691.68 billion project.
To address the concerns, State Minister for Finance Henry Musasizi assured Parliament that the government would prioritize payments to the contractor after a two-year grace period. This would mean that the insurance would cover only 60% of the project, aligning with the reduced insurance fee recommendation.
Additionally, Parliament has urged the Ministry of Finance to renegotiate the terms of a separate loan request to finance the Lusalira-Kasambya-Nkonge-Lumegere-Ssembabule Road Upgrading Project. Lawmakers expressed concerns over the high-interest rate and cost per kilometer for this project and recommended seeking better terms.
Despite some opposition within Parliament, including a minority report questioning the clarity of the President’s approval process for the loan, Deputy Speaker Thomas Tayebwa defended the project. He emphasized the importance of the road for Uganda’s oil infrastructure, noting that the construction standards required for oil roads are significantly higher due to the heavy equipment they will carry.
This development highlights the ongoing scrutiny over large infrastructure projects in Uganda, with Parliament seeking to ensure better financial terms and efficient use of resources.