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Gov’t to borrow UGX1.7Trn to fund Oil Roads

State Minister of Finance for Planning, Hon. David Bahati has presented a proposal to Parliament seeking to borrow UGX1,720,633,981,348 to fund the upgrade and construction of national oil roads within the Albertine Graben(PHOTO/File)

KAMPALA – Government has presented a proposal to Parliament seeking to borrow USD 456,378,107 approximately UGX1,720,633,981,348 to fund the upgrade and construction of national oil roads within the Albertine Graben.

State for Planning, David Bahati took to the floor to present the loan request that is expected to be received from the China Exim Bank and used to construct Masindi-Park junction and Tangi Junction-Paraa Bulisa Road, Hoima- Butiaba-Wanseko to Pavel Standard; and Buhimba-Bulamagi and Bulamagi-Igayaza-Kakumiro Roads.

Bahati told Parliament that China Exim Bank will only cover 85% of the commercial contract for each package and therefore Government will finance 15% under each package.

The Minister told the Minister that the existing roads are predominantly gravel, narrow, swampy, and are structurally noncompliant to the kind of traffic envisaged that the oil sector will be adding during their operations saying it poses huge logistics challenges to the oil production timelines.

“These project roads are earmarked as key access roads required for constructing the East African Community Oil Pipeline and the Refinery in Hoima. The existing roads also suffer from excessive flooding during the wet season and have a series of both permanent and seasonal long swaps,” said Bahati.

He said the decision to upgrade the oil roads is aimed at averting the challenges noted above and help Government realize the objective of developing transport infrastructure required to support oil development and other strategic priorities of the country, implementation of this project is of priority.

The total project cost is estimated at USD 536.915 million of which 85% equivalent to USD 456.378 Million and the loan has a payment period of 15 years including 5 years grace period.

The project will be implemented by Uganda National Roads Authority under the supervision of the Ministry of Works and Transport and the Design and Construction of the oil roads will be done by three Chinese construction companies namely: M/s Chongqing International Construction Corporation (CICO) for Hoima-Butiaba-Wanseko road; M/s China Wu Yi Co. Ltd for Buhimba-Nalweyo-Bulamagi and Bulamagi-Igayaza-Kakumiro Roads Upgrade; and M/s China Communications Construction Company Ltd for Masindi-Park Junction and Tangi Junction-Paraa Buliisa Road.

The development comes at a time when information indicates that as at end of December 2018, the outstanding total public debt, including publically guaranteed debt, amounted to USD11,515.07M approximately UGX43,414,116,707 out of which USD7,655.29M (66.5%) was external debt and USD3,859.77M (33.5%) was domestic debt.

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