Legislators ask govt to allocate delayed road works sh1.5 trillion

KAMPALA - Following reports of stalled road works, legislators on the Physical Infrastructure Committee have asked government to increase the budget allocation for works ministry by sh1.5 trillion in order to clear all unpaid debts for stalled road works.

In a report to the Budget Committee currently scrutinising the budget allocations, the MPs noted that delayed payment to contractors has been and continues to be one of the major factors negatively affecting the construction industry in the Works and Transport sector.

Presenting the report to the Committee, Physical Infrastructure Committee deputy chairperson Tonny Awany noted that long-standing payables are an indication of poor budgeting and cause a risk of litigation and payment of penalties (interest) for delayed payments.

“Consequently, Contractors lose the properties they used as collateral to acquire loans to execute Government projects. Commercial Banks, which are the main financiers of the industry, are losing confidence in Government-funded projects, making these projects less competitive and hence more expensive. 

Local Contractors have also lost credibility before associated stakeholders as they are looked at as high-risk borrowers. Additionally, contractors have been frustrated and hindered from performing ongoing works and other obligations,” Awany noted.

He said the Committee noted that continued non-payment had triggered a downstream spiral, with the negative effect of suppressing related manufacturing and smaller businesses along the supply chain.

According to Awany, although the works ministry had proposed an allocation of sh1.7 trillion in the financial year 2025/26, only sh150 billion has been allocated, leaving a funding gap of sh1.5 trillion.

“The Committee noted that the problem of arrears is perennial and needs to be addressed urgently in order to avert the interest accrued as a result of unpaid arrears. The Committee was informed that approximately interest amounting to sh284m accrues daily on unpaid debts,” Awany told the Budget Committee chaired by Patrick Isiagi (Kacumbala County).

He said long-standing payables are an indication of poor budgeting and cause a risk of unnecessary litigation and payment of penalties (interest) for delayed payments.

“The Committee therefore recommends and urges Government to provide additional resources to the tune of sh1.5 trillion to clear the outstanding debt in order to avoid paying interest, which creates an additional financial burden to the taxpayers,” he said.

On the rehabilitation and construction of low-cost district roads, Awany said that although government had promised to rehabilitate a number of districts, it may not be possible due to a shortage of funding.

He said out of a budgetary requirement of sh80b, the Ministry was allocated only sh27b, leaving a funding gap of sh52.9b.

The roads were planned in the districts of Kazo, Nwoya, Bukedea, Kanungu, Koboko, Mukono, Soroti, Rukiga, Tororo, Kamuli, Mubende, Kitgum, Mayrrge, Amuria, Nakapiripirit, Busia, Butaleja, Serere, Katakwi, Kaperebyong, Otukc, Omoro, Oyam, Madi-Okotlo, Alcbtong, Pader, Lira, Kole, Lwengo, Kyankwanzi, Masaka, Luweero, Kayunga, Nakasongola, Buhweju, Kisoro, Kabarole, Kasese, Rakai, Kiruhura, Namutumba, Kaliro, Buyende, .-linja, Namayingo, Kamuli, Bugweri and Luuka.

“The Committee noted that infrastructure facilitates movement of raw materials to production centres and finished goods to markets, supporting industrialisation and value addition as enshrined in the NDP IV. Maintenance and rehabilitation of existing infrastructure go a long way in extending their lifespan and enhancing safety. Further, efficient transport management can also be an avenue for raising additional revenue through innovative infrastructure financing strategies.

“In order to achieve the planned objective, government then has to prioritise funding to district roads which have great potential to drive the much-desired socio-economic transformation, especially with road infrastructure maintenance. The Committee therefore recommends and urges Government to provide additional sh52.9 billion towards the rehabilitation of district roads as they are a critical driver towards socio-economic transformation,” the MPs said in a report.