Gov't to pay sh99.5b award to construction firm

By Andante Okanya

KAMPALA - Government is to pay sh95.5b to a construction firm contracted to build a first-class tarmac road from Pakwach in Nebbi to Arua Municipality boundary in 1977, an accumulated sum endorsed by Supreme Court.

On April 22 this year, Construction Engineers and Builders Limited petitioned the civil division of the High Court in Kampala to compel the government to immediately pay the sum.

It was filed through the law firm Kasirye, Byaruhanga and Company Advocates, and Solicitors.

Court documents do not indicate the distance of the road. However, Pakwach to Arua is about 129 kilometres.

Government's chief legal representative and advisor the Attorney General (AG) and the secretary to the treasury in the Finance ministry are listed as respondents.

The sum is an accumulated award from the Supreme Court judgment delivered on September 4, 1995 for Civil Appeal Number 24 of 1994.

The principle sum was initially $7,367,634, at an annual interest of 12% from August 14, 1986.

The interest annually is $884,116, with a cumulative computation for the 29 years bringing the figure to $25,639,366.The grand total is $33,007,000, which is sh99.5b at the dollar rate of sh3015.

‘Undesirable burden’

The constructor's managing director Dr. Pritam Panesar has sworn an affidavit, asserting that the money is undisputed, as it has been endorsed by the apex court of the land.

"The applicant's claim is not, and cannot, be in dispute as it has been finally determined by the Supreme Court of Uganda, and that the second respondent [secretary to the treasury] has a legal duty to make the sought payment," Panesar states.

Panesar cautions that it is in the best interest of the government to meet its debt obligations, as the cumulative sum is an exorbitant liability to the national coffers.

"The respondent's failure to settle the applicant's claim lays an undesirable burden on Uganda's economy.”

On Wednesday, the application had been scheduled for hearing in court presided over by Justice Yasin Nyanzi.

‘Instructed not to proceed’

The company lawyers Andrew Kasirye and Paul Rutisya were present. The Attorney General was represented by state attorney Imelda Adong.

 She however stated that she was not ready to proceed. Adong said she had been instructed to inform court that payment was being drafted.

"I have been instructed not to proceed. Government is in the process of settling the debt.”

But Kasirye said such an assurance must be backed by a timeline.

Accordingly, the judge fixed hearing of the application for June 10, subject to the Attorney General's position.

Case background

The company undertook to construct a first-class tarmac road from Pakwach to Arua Municipality boundary.

The contract was entered September 23, 1977, and construction commenced on December 1, 1977. Completion was expected on June 1, 1980.

But unfortunately, the Liberation war disrupted work, culminating in a decision by the engineers representative who suspended the construction on April 11, 1979.

Subsequently, the Indian High Commission repatriated the Indian nationals to Kenya, together with some of their equipment.

The company office site, and some of the equipment left behind, was destroyed.

According to court documents, two Arab States (not specified) had contributed funds to the contract price of sh306, 555,050, of which sh294,555,050 was the contract price and 12m was reserved for contingencies.

The Arab States were understood to have abandoned funding. Subsequently in 1985, the construction firm  understood that the government had no more funds and could not continue.

Consequently, the constructor interpreted the attitude as a breach or abandonment, and on November 4, 1985, it wrote to the works ministry permanent secretary, clarifying its predicament.

The company demanded dues, especially the foreign currency elements, and claims under the special risk claim. When government was adamant to pay, the company sued, claiming a total of Deutschmarks 13,234,213 and sh20m.

But government denied and lodged a sh6m counterclaim, which had been paid on account. Government was aggrieved that the constructor had abandoned the contract.

The trial judge at the time, Wilson Tsekooko, agreed with government's argument. However, the constructor appealed to the Supreme Court which overturned the decision.