The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | The government has vowed to clear the half a trillion hhillings owed to contractors under the Ministry of Works and Transport, before the end of this year. The Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi, says these monies will be cleared over the financial year.
The arrears were accumulated over several years but mainly between 2020 and 2024 by the Uganda National Roads Authority (UNRA), which was in charge of building the national road network, including roads, bridges, ferries and railways.
Waiswa Bageya, the Permanent Secretary at the Ministry of Works and Transport, says the functions of the former UNRA, which contracted the works, are now fully under the ministry.
Earlier this month, Parliament passed a motion that provides for funds to be reallocated to ministries from agencies affected by the Rationalization of Government Agencies and Public Expenditure (RAPEX).
The motion presented by Henry Musasizi, Minister of State for Finance, Planning and Economic Development, aims to ensure continuity of service.
In 2023, local contractors petitioned the Parliamentary Committee on Physical Infrastructure to impact on UNRA to clear their outstanding arrears amounting to 500 Billion Shillings.
The Uganda National Association of Building and Civil Engineering Contractors, in their petition, said that the arrears had greatly affected their operations and livelihoods, made worse by the fact that their operations were funded by bank loans.
Apart from interest and bank penalties, they also said they were incurring high costs in the form of tax penalties for delayed remittances.
In the 2022/2023 financial year Auditor General’s report, it was revealed that the government was losing 2.2 Billion Shillings daily, paid as interest charges on delayed payment to project contractors.
The report also revealed that financial statements of UNRA and the Ministry of Works and Transport had an outstanding payment of 804.26 Billion Shillings, with UNRA accounting for a total of 588.77 billion, as of June 30, 2023.
“Long outstanding payables is an indication of poor budgeting and causes a risk of litigation and payment of penalties (Interest) for delayed payments,” the report said, adding that, for example, UNRA paid out 11.93 billion in interest charges for the Interim Payment Certificates which were not paid in the agreed timelines.
“This was attributed to inadequate budget provisions for settlement of domestic arrears,” reads the audit report.
Ggoobi says the cause of these accumulated arrears was poor planning and budgeting, which is now being addressed, vowing that this will not re-occur effective financial year 2025/26.
He also noted that in some cases, contracting was not done well, adding that the Government was committed without money in the budget and that the multi-year commitments were not being protected.
Ggoobi asked the contractors to waive penalties and charges to enable the government to pay all pending certificates, adding that they should also desist from signing contracts when there is no money in the budget.
UNABSEC, in a joint statement to the Ggoobi, said that delayed payments negatively affect the construction business in Uganda and urged the government to fast-track the payments so that contractors can meet their obligations to financial institutions and suppliers.
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