CAA to repay sh70b CHOGM loan
Feb 09, 2010
THE Civil Aviation Authority (CAA) has appealed to the Government to help it repay a loan secured for the 2007 Commonwealth summit activities. The Government owes CAA sh68b.
By Mary Karugaba
THE Civil Aviation Authority (CAA) has appealed to the Government to help it repay a loan secured for the 2007 Commonwealth summit activities. The Government owes CAA sh68b.
CAA boss Rama Makuza told the public accounts committee that a sh71b commercial loan was borrowed in September 2006 from Stanbic Bank to finance the renovation and upgrading of Entebbe International Airport ahead of CHOGM.
He said the money was borrowed on condition that if the Government paid its debts to CAA it would repay the loan.
He said CAA had to seek external financing due to inadequate funds to implement all the projects. Makuza noted that of the total debt, the Government has only paid sh10b.
“The Government has not lived to expectation. I have knocked at every door, pleaded for this money but to no avail,†he explained.
Makuza, however, clarified that the airport facilities will not be attached in case CAA fails to pay because the Government signed an agreement that it would pay the loan.
According to the committee, CAA is expected to pay back the loan within seven years at an interest rate of 14%. That means taxpayers will have to cough up about sh10b annually to clear the loan. CAA will also incur unspecified amount in exchange rate losses.
Makuza told the committee, chaired by Nandala Mafabi, that the loan has now become a burden and is constraining their activities.
The MPs were angry that despite Parliament passing a budget close to sh300b for CHOGM, CAA went ahead and borrowed money at a very high interest rate.
The members were also shocked that former finance minister Ezra Suruma guaranteed the loan. The law requires that any loan to the Government must be approved by Parliament.
“Which powers did Suruma use to single-handedly approve such an expensive loan?†Mafabi asked.
Theodore Ssekikubo complained that as a result of the loan, CAA is now crippled and cannot sustain the payments.
“This was a very expensive loan which you were forced to accept. I have information that some people wanted money and forced you to borrow money from a commercial bank. Unfortunately, you have now failed to sustain it,†he said.
Asked to name the individuals involved, Makuza kept quiet.
He noted that if Parliament had been informed, it would never have authorised the borrowing.
Makuza surprised members when he failed to mention the total CHOGM budget he had submitted for approval.
Documents submitted to the committee indicated that CAA received sh71b from Stanbic bank, sh13b from the Government, sh2.6b from MONUC and sh3.2b from internally generated funds. Makuza said CAA still owes contractors sh1.2b.
During the meeting, the committee observed that most of the projects were procured under restricted bidding and in some cases, the project cost sum was increased without explanations.
Makuza failed to justify numerous variations in project costs, saying he needed more time.
THE Civil Aviation Authority (CAA) has appealed to the Government to help it repay a loan secured for the 2007 Commonwealth summit activities. The Government owes CAA sh68b.
CAA boss Rama Makuza told the public accounts committee that a sh71b commercial loan was borrowed in September 2006 from Stanbic Bank to finance the renovation and upgrading of Entebbe International Airport ahead of CHOGM.
He said the money was borrowed on condition that if the Government paid its debts to CAA it would repay the loan.
He said CAA had to seek external financing due to inadequate funds to implement all the projects. Makuza noted that of the total debt, the Government has only paid sh10b.
“The Government has not lived to expectation. I have knocked at every door, pleaded for this money but to no avail,†he explained.
Makuza, however, clarified that the airport facilities will not be attached in case CAA fails to pay because the Government signed an agreement that it would pay the loan.
According to the committee, CAA is expected to pay back the loan within seven years at an interest rate of 14%. That means taxpayers will have to cough up about sh10b annually to clear the loan. CAA will also incur unspecified amount in exchange rate losses.
Makuza told the committee, chaired by Nandala Mafabi, that the loan has now become a burden and is constraining their activities.
The MPs were angry that despite Parliament passing a budget close to sh300b for CHOGM, CAA went ahead and borrowed money at a very high interest rate.
The members were also shocked that former finance minister Ezra Suruma guaranteed the loan. The law requires that any loan to the Government must be approved by Parliament.
“Which powers did Suruma use to single-handedly approve such an expensive loan?†Mafabi asked.
Theodore Ssekikubo complained that as a result of the loan, CAA is now crippled and cannot sustain the payments.
“This was a very expensive loan which you were forced to accept. I have information that some people wanted money and forced you to borrow money from a commercial bank. Unfortunately, you have now failed to sustain it,†he said.
Asked to name the individuals involved, Makuza kept quiet.
He noted that if Parliament had been informed, it would never have authorised the borrowing.
Makuza surprised members when he failed to mention the total CHOGM budget he had submitted for approval.
Documents submitted to the committee indicated that CAA received sh71b from Stanbic bank, sh13b from the Government, sh2.6b from MONUC and sh3.2b from internally generated funds. Makuza said CAA still owes contractors sh1.2b.
During the meeting, the committee observed that most of the projects were procured under restricted bidding and in some cases, the project cost sum was increased without explanations.
Makuza failed to justify numerous variations in project costs, saying he needed more time.