Kampala-The Uganda National Roads Authority (UNRA) says that it is paying up to Shs342 million daily in interest to project contractors who have not been paid for their work.
UNRA officials led by their Executive Director, Allen Kagina, on Tuesday appeared before the finance committee over the impact of the inadequate cash limit for the half year of Financial Year 2022/2023.
Kagina told MPs that UNRA closed the financial year with total arrears of Shs528 billion including Shs89.5 billion for road maintenance which is generating interest.
She said that the Government released Shs689 billion against a requirement of Shs1.2 trillion.
“The arrears position has increased by 145.75 per cent from Shs215 billion at the end of the Financial Year 2020/21 to Shs528 billion at the end of the Financial Year 2021/2022. This is largely attributed to the budget suppression as observed above that is only 77 per cent of the approved Government of Uganda budget that was released,” Kagina said.
She added that for failure to pay the debt, they will incur nugatory expenditure that includes interest expenses, idle equipment, and reduction in the works by the contractors.
Kagina further told the MPs that this will also lead to failure to acquire land for the different projects in time and failure to sign contracts whose procurements have been completed.
MPs were shocked to know that government was losing Shs342 million daily to interest on debts that are not being paid.
Kabula County MP Enos Asiimwe said there is a need to clear the arrears as it is leading the government to lose. He tasked UNRA to explain how the interests came about.
“If you can give us a table of how this money has got to this point, and which companies are demanding this money, and the communication between you and finance demanding this payment – we need to know who is not doing his job,” he said.
Otuke County MP Paul Omara said Shs342 million in interest lost daily by government is a huge blow to the economy and sought to understand where the main cause of the problem is from UNRA.
Relatedly, the MPs also tasked UNRA to explain its failure to rehabilitate the Kamdini-Lira Road and the Karuma-Pakwach Road which have been in a sorry state and negatively impacted on service delivery and transportation.
Kagina told the MPs that road works on the Kamdini-Lira Road will start this week, while the procurement process for the Karuma-Pakwach Road construction has started.
She told MPs that the challenge with road construction is that there are numerous commitments to construct the roads compared to the available resources.