Henry Musasizi, State Minister for General Duties at Ministry of Finance
The Government of Uganda through the Ministry of Finance has revealed plans to cancel 17 projects worth Shs4.2Trn after staying idle for long without completion and takeoff.
The plan was revealed by Henry Musasizi, State Minister for General Duties at Ministry of Finance while appearing before Parliament’s Budget Committee to officially present the 2022/2023 national budget framework paper before Parliament’s Budget Committee.
In documents tabled before Parliament’s Budget Committee, the Ministry admitted that Uganda’s externally financed project portfolio has been faced with a number of challenges like increase in direct costs of non performing projects including commitment fees, time and cost overruns resulting from delayed project implementation and lockout of funding for other potentially beneficial projects by limiting fiscal space for their funding.
This prompted the Ministry of Finance to carry out an assessment of project performance in order to ascertain non-performing projects that should either be re-structured, renegotiated or canceled in order to free resources to finance agreed priority projects which are moderate risk.
“Accordingly, Government has identified 17 projects that are at a risk which amounts to USD1.214Bn worth Shs4.276Trn of which USD457Mn (Shs1.609Trn) has been disbursed and USD757Million (Shs2.665Trn) remains undisbursed. Government will carry out further assessment of these projects with a view to renegotiate or cancel the projects in order to fire fiscal space for FY2022/2023,” Finance Ministry said in its report.
This revelation prompted MPs Muwanga Kivumbi (Butambala County) and Barnabas Tinkasimiire (Buyaga East) to task the Ministry to table the list of the contracts that are headed for cancellation and what happens to the funds already spent on these projects.
“We can’t consider a Budget Framework Paper where government wants to consider 17projects (for cancellation) and they aren’t elaborated. They want to cancel another expenditure, so we want to know in clear terms, what are these projects which you have targeted and you want to cancel?” asked Muwanga.
He was backed by Tinkasimiire who pointed out that there are some projects that have stalled in Kagadi district and Government hasn’t been forthcoming with reasons for their stalling, which has raised suspicions if they are among the upcoming projects to be canceled .
Tinkasimiire asked: “I have three projects in my place including Muzizi Hydro-power project where they have spent substantial amount of money and now when we approached the Ministry of Energy, now they are developing a cold feet. People were moblised and their property were valued for compensation and now we are trying to moblise people to reposes their land. Is this part of the projects?”
Ramathan Ggoobi, Secretary to Treasury however called out the hypocrisy shown by the MPs wondering why they are complaining about stalled projects but they are also protesting reports on impending cancellation, saying the cancellation or renegotiation is intended to give Ugandans better projects.
He explained that the said projects aren’t disbursing the money that were borrowed for them to deliver goods and services to the people.
“After this careful scrutiny performing, there are projects which will be redesigned, there are those which will be renegotiated, there are those which will be cancelled then because it is in your constituency, you say that analysis can’t apply. What do you do to such projects, do you sit down. We are going to get better projects for your people,” said Ggoobi.
He pointed out to the Muzizi project alluded to by Tinkasimiire, saying it has been on since 2013 and despite Government paying commitment fees, the projects hasn’t taken off.
In the December 2019 Auditor General report on Treasury Operations, Uganda’s undisbursed loans stood at Shs16.750Trn which has increased government expenditure on debt repayment in the form of payment of high commitment fees, and denied government the funds that could have been put to financing other budgetary needs.
Auditor General, John Muwanga warned that the failure to disbursement loans would cause unnecessary tax burden to the taxpayers.
In the 2022/2023 national budget framework paper, the resource envelop is worth Shs43.083Trn and of this, Shs15Trn has been set aside for loan repayment for both domestic and external debt.