Uganda's Parliament approves sh467b loan for 'oil roads'

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Uganda's Parliament has approved Government's request to borrow €115.88 million (sh467 billion) from Standard Chartered Bank to finance the construction of 68 kilometres of 'oil roads'.

These roads are under Package 6B of the Critical Oil Roads Programme, which covers the upgrading of the Karugutu–Ntoroko Road (56.5km), the link to Rwebisengo (8.2km), and 3.3km of town roads in Ntoroko district.

These roads form part of the wider network of 'oil roads' located in Uganda’s Albertine Graben region, which spans districts such as Hoima, Buliisa, and Nwoya.

Presenting the loan request for second reading, finance state minister (general duties) Henry Musasizi, said the funds will enable the government to accelerate infrastructure development needed to achieve Uganda's first oil by 2025.

However, debate in the House was marked by dissenting views. Some MPs expressed concern about the high interest rates and loan terms, warning that Uganda’s debt-to-GDP ratio was approaching the 52% threshold.

MPs Hassan Kirumira (Katikamu South) and Charles Tebandeke (Bbaale County) presented a minority report, arguing that the loan process had not fully complied with parliamentary procedures and that the project sites had not been inspected.

They urged the government to seek more favourable borrowing terms from other creditors to reduce the debt burden.

The committee on national economy, chaired by MP John Bosco Ikojo, presented the main report recommending approval of the loan. Ikojo said the committee had considered the government’s justifications and noted that most of the civil works for oil road packages 1, 2, 3, and 5 were complete, while works for packages 4 and 6A were ongoing.

Ikojo urged the Ministry of Works and Transport to develop a mechanism to fast-track the implementation of road projects under its portfolio to avoid further delays.

Under the project, the then Uganda National Roads Authority (UNRA) signed a commercial contract with Afcons Infrastructure Limited on March 29, 2023, worth sh382.68 billion (exclusive of VAT) for design and construction. Consultancy services for design review and construction supervision were awarded to Prome Consultant Limited.

So far, the government has paid sh16.3 billion for land compensation out of a total estimated sh18.5 billion.

The committee recommended that the construction of the River Semuliki Bridge, which links Uganda to the Democratic Republic of Congo (DRC), be included in the project to boost cross-border trade and improve livelihoods in the region.

It noted that several critical 'oil roads' in Bunyoro sub-region were left out of the current phase, including; Nalweyo–Kisiita–Mpasana–Nkoko–Masode–Kiboga, Kisiita–Bukwiri–Kyankwanzi and Kisiita–Mwitanzige–Kikona.

The committee urged the government to prioritise the construction of these roads to enhance connectivity and promote economic growth in the region.