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Government Secures UGX 1.22 Trillion Loan For National Road Upgrades

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Kampala Potholes

Parliament has granted approval for the government’s request to borrow UGX 1.22 trillion for the enhancement of national roads across Uganda. The funds will be sourced from the Islamic Development Bank and the OPEC Fund for International Development, with the loan focused on critical road projects.

During a plenary sitting chaired by Speaker Anita Among on Wednesday, Members of Parliament gave the green light for the loan, emphasizing its allocation to significant road infrastructure improvements. The specific projects include the rehabilitation of the Masindi port bridge designed to last 100 years, the Katine-Ochero road, Kiruhura-Bwizi-Rwamwanja-Kahunge road, and the Mpara-Bwizi road, each designed for a lifespan of 20 years.

Robert Migadde, the Deputy Chairperson of the National Economy Committee, presented an assessment report highlighting that while Uganda’s public debt remains within sustainable levels, the country is rated at a moderate risk of debt distress. The committee recommended that the Ministry of Finance, Planning, and Economic Development renegotiate the risk premium of the loan to a lower rate and have it fixed for the entire debt servicing period.

Additionally, the committee urged ministries, departments, and agencies (MDAs) to adhere to strict project designs before securing funds, aiming to minimize project delays by effectively compensating project-affected persons (PAPs) under the Upgrading of National Roads Project.

The government is expected to allocate UGX 83.388 billion for land acquisition, and MPs also authorized the government to refinance the reconstruction, rehabilitation, and upgrade of major roads in Masaka and Ntungamo districts at UGX 691.6 billion.

Under the prefinancing agreement, the Masaka-Mutukula road will be reconstructed, the Nyendo-Villa Maria road will be rehabilitated, access roads to Masaka UPDF barracks and Masaka Industrial Park will be upgraded, and the Kikagati-Kafunjo road will be improved.

In a committee report, it was observed that the unit cost of a road under the project is valued at UGX 5.08 billion per kilometer compared to UGX 3.38 billion [for upgrading] as indicated in the annual budget performance report for the financial year 2022/2023. The committee recommended that the Ministry of Works and Transport, as well as the Uganda National Roads Authority (UNRA), ensure the contractor delivers the best quality bridges and roads to achieve value for money.

This approval follows a recent parliamentary decision to borrow an additional UGX 1.807 trillion for the National Internet Fiber and Climate Smart Agricultural Transformation projects from the Export-Import Bank of China and the World Bank.

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