Parliament urges renegotiation of Masaka-Mutukula road contract amid insurance dispute
This move comes after Parliament raised concerns about the high insurance costs embedded in the project’s financing.
The Uganda National Roads Authority (UNRA) has been directed to renegotiate its contract with Chongqing International Construction Corporation (CICO) for the reconstruction of the Masaka-Mutukula Road and the rehabilitation of several roads in Masaka District.
This move comes after Parliament raised concerns about the high insurance costs embedded in the project’s financing.
Lawmakers have recommended a 40% reduction in the Shs 38.86 billion insurance component provided by the China Export & Credit Insurance Corporation (Sinosure).
This recommendation was included in a report presented by Hon. John Bosco Ikojo, Chairperson of the Committee on National Economy, during a plenary session on August 8, 2024.
CICO had argued that the Sinosure Insurance fee was mandatory for all Chinese investments in overseas projects to ensure continuity in case of government payment difficulties. Initially, a loan worth Shs 691.68 billion was approved in December 2023 to finance the roadworks, but the insurance component was not factored into the budget.
Hon. Henry Musasizi, State Minister for Finance, disclosed that the insurance cost was valued at Shs 64.77 billion, covering 100% of the project cost. However, following the committee’s review, it was agreed that the insurance should only cover the 60% of the project cost financed by borrowing, with the remaining 40% prioritized for payment to avoid implementation delays.
The proposal sparked further debate, with some legislators, including Hon. Hassan Kirumira and Hon. Goreth Namugga, expressing concerns about the overall borrowing strategy and the government’s commitment to providing counterpart funding for these projects.
In addition, Parliament approved a committee recommendation to renegotiate the terms of a proposed loan of up to US$136.95 million from Citibank for the Lusalira-Kasambya-Nkonge-Lumegere-Ssembabule Road Upgrading Project. The committee noted the loan’s high-interest rate and non-concessional nature, urging the Ministry of Finance to secure better terms.
Despite the concerns, Deputy Speaker Thomas Tayebwa defended the loan for the oil-road project, emphasizing its importance for Uganda’s oil infrastructure and the need to align it with ongoing developments like the East African Crude Oil Pipeline Project.
