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Gov’t Bails Out Abubaker Technical Services With Shs26bn As Local Construction Company Struggles To Pay Bank Loan

Abubaker Technical Services on duty/ courtesy photo

MPs on Parliament’s Budget Committee have queried the decision by Government to bailout construction company, Abubaker Technical Services and General Supplies Limited through the acquisition of 7% shares valued at Shs26.15bn, yet there are many construction companies wallowing in debt due to the failure by the same Government to pay them for the works done.

The Uganda Development Corporation (UDC) presented a supplementary budget request to a tune of Shs26.15Bn to acquire 7% equity shares into Abubaker Technical Services after the company suffered financial shocks due to the effects of Covid-19 pandemic which negatively impacted its loan acquired from dfcu bank, that stood at Shs29.3bn as of May 2022, thus threatening the company’s survival.

Although the company requested for Shs90bn bailout  on 30th September 2022, the UDC Board only approved Shs26.155bn and the shareholder and share subscription agreements were cleared by the Solicitor General.

Alfred Edakasi, the Kaberamaido County MP, while presenting the report from the Trade Committee, before Parliament’s Budget Committee however recommended that the funds be provided for in the 2023/2024 national budget.

“However, the request for Shs25.15Bn supplementary to strengthen the company’s capacity in road and bridge construction does not meet the criteria for approval of supplementary expenditure since it was neither unavoidable nor unforeseeable,” said Edakasi.

However, Agnes Apea, the Amolatar District Woman MP, described the choice of Abubaker Technical Services as discriminatory against other players in the construction company suffering from the similar fate.

“This Abubaker kind of thing which we are seeing here shows you that whoever releases this money, there is a lot of problems for me, I would add on their recommendation that the Ministry of Finance be investigated. This kind of transaction is illegal, fraudulent, it is everything to do with bad decisions of management of finances in this country,” she said.

Patrick Isiagi, the Kachumbala County MP, criticized the recommendations from the Trade Committee to have the money provided for in the 2023/2024 national budget yet the Committee hasn’t put in place conditions for this funding.

“I thought you would come up with reasons of the issues to buy these shares and what controls have been put there, what terms have been put there, have you seen the shareholding. And if the share agreements were cleared by the solicitor general, the tell us, are they okay? Because there are many construction companies in this country and many of these construction companies have been doing roads, they were given these contracts by government, government hasn’t paid them and many got loans to do these roads, some have lost properties,” said Isiagi.

Dickson Kateshumbwa, the Sheema Municipality MP, asked for clarification on the criteria used to select Abubaker Technical Services out of all the other struggling construction companies.

“The idea of supporting indigenous companies in the construction sector as a principle is a good idea so that we wean ourselves from these foreign Chinese constructors. But we need to understand the process, if you are bailing out this guy, but you have people struggling with arrears whom you haven’t paid. The committee should have gone an extra mile to interrogate that, otherwise, this recommendation seems an easy way for the Committee to throw work back to us,” Kateshumbwa said.

Kira Municipality’s Ibrahim Ssemujju wondered if the Trade Committee had addressed itself to the Public-Private Partnership Act which makes it a requirement that for every joint venture, government must seek approval from Parliament.

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