PARLIAMENT: MPs urge government to Prioritise funds for contractors to avoid financial hemorrhage.
Government has been urged to prioritise funds meant for the payment of contractors hired by Uganda National Roads Authority (UNRA) to avoid financial hemorrhage.
As of 27 September 2022, contractors UNRA owed contractors a whopping Shs832 billion in arrears arising from delayed payments for the road works.
This followed a government decision to suppress the budget for Financial Year 2021/2022 by 40 per cent due to poor revenue performance and COVID-19 effects.
According to the report of the Committee on Physical Infrastructure that was tabled and adopted on Tuesday, 24 January 2023 during plenary sitting, this debt accrues interest amounting to Shs235.6 million per day at the rate of 15 per cent per annum.
This matter was first raised by Bukoto Central MP, Hon. Richard Sebamala during the 04 May 2022 plenary sitting prompting the Speaker to direct the committee to investigate the matter.
“To avoid payment of accumulated interest, the government should endeavor to prioritise funds meant for meeting contractual obligations because the interest rate on arrears of certificates and invoices is quite high,” Hon. Robert Kasolo, Deputy Committee Chairperson said.
The committee recommended that the Ministry of Finance honours its commitment to clear the debts owed to contractors as a first call in the first quarter of the new financial year and also prioritise the operationalisation of the road fund.
“Government should also increase funding to the ministries that were affected by the 40 per cent cut in the previous year 2021/2022 in order to cover for the deficit accrued in infrastructure development,” Kasolo said.
The other government entities that owe construction contractors include, Ministries of Works and Transport, Water and Environment, Lands, Housing and Urban Development, Health and Education and Sports and various district local governments.
The MPs noted that government funded projects are becoming less competitive and very expensive due to continuous contractual breaches and that commercial banks which are the main financiers of construction companies are losing confidence in government.
Hon. Vincent Obong (Indep., Lira West Division) advised the Ministry of Finance to bring a supplementary budget to clear the debts that UNRA owes contractors.
“If we are losing Shs235.6 million per day in interest, that means in a month we lose Shs7 billion. We need the Ministry of Finance to bring a supplementary budget because Shs 7 billion can do many kilometres of roads,” Obong said.
According to Hon. Denis Oguzu Lee (FDC, Maracha County), the country’s debt burden results from the weak domestic resource mobilization policy that gives ‘unnecessary’ tax exceptions to companies that would otherwise bring revenue.
“This country forgoes Shs2.8 trillion in tax exceptions; so where do you expect to get taxes to work on roads? First, we must address the issue of resource mobilisation,” Oguzu said.