Uganda Hotel Tourism and Training Institute was constructed by Roko
Government through the Deputy Solicitor General, Pius Perry Biribonwoha has warned that if the proposal by Ministry of Finance to inject Shs202.13bn into Roko Construction Company by way purchasing 150,000 preferential shares in the company, is rejected by Parliament will leave Uganda’s banking sector limping. This will ultimately adversely affect the economy.
“Government is actually saying this company is in distress. I would like to invite MPs to look at this as a strategic intervention because of the contagion effect that you would have if you didn’t intervene in trying to assist this company to get back on its feet because of the local effect on the different sectors of the economy,” Biribonwoha told Parliament’s Budget Committee yesterday.
Charles Byaruhanga, Technical Adviser of Budget at the Ministry of Finance informed the Committee that even Bank of Uganda had warned of the possible effect the refusal to bailout Roko would have on Uganda’s banking sector.
He explained: “We have had discussions with Bank of Uganda, with respect to Roko Construction’s indebtness on the financial sector. Their indication to us is that any collapse of Roko will have serious ramifications on the financial sector.”
Information before the Committee indicates that as at 31st May 2022, Roko’s debts were equivalent to Shs202.419Bn and the breakdown highlights US$35,716,989 and Shs20.713bn concentrated in DFCU Bank (Shs49.45Bn), ABSA (Shs30.4Bn) and Bank of Baroda (Shs11.5Bn).
The contingent liabilities from bank guarantees are to a tune of Shs130.903Bn issued on ongoing projects and these will be retired upon completion of the projects, while the debt to suppliers are to a tune of Shs46.767Bn.
According to the payment schedule by Government, the first payment to Roko Construction will come after 12months upon signing the agreement to a tune of US$7,489,507, while the second payment will come after 18months to a tune of US$7,004,617 and the third payment will fall on after two years to a tune of US$7,337,067.
The next batch of funds will come on after 30months to a tune of US$7,673150, and that will be followed by another payment schedule coming after 36months worth US$8,003,783, this will be followed by a payment US$8,334,417 and the last payment is expected to come after 48months to a tune of Shs8,665,050 bringing total expenditure to US$54,507,590.
However, a section of legislators rejected threats by government that the failure to bail out Roko Construction will likely crash Uganda’s banking sector describing the argument as false.
