The Uganda National Roads Authority (UNRA) has been directed by Parliament to renegotiate a key contract with Chongqing International Construction Corporation (CICO) concerning the reconstruction of the Masaka-Mutukula Road and the rehabilitation of several roads within Masaka District.
Legislators have raised concerns about the inclusion of a Shs 38.86 billion insurance component provided by China Export & Credit Insurance Corporation (Sinosure) and are pushing for its reduction by 40 percent. The move comes amid broader discussions on the need for more prudent loan utilization in Uganda’s infrastructure projects.
During a heated parliamentary session, concerns were raised over the cost implications of the Sinosure insurance component embedded in the addendum to the proposal for pre-financing the Masaka-Mutukula Road works. The Shs 38.86 billion insurance deal, tied to the loan package from the China Export & Credit Insurance Corporation, sparked debate among MPs, who questioned whether it represented good value for Uganda.
Hon. Hassan Kirumira (NUP, Katikamu County South) presented a minority report urging Parliament to withhold approval of the addendum until the Minister of Works and Transport could clarify the insurance terms and their impact on the overall project cost. “We must ensure that every shilling is well spent, especially in these large-scale infrastructure projects where the stakes are high,” Kirumira argued.
Hon. Goreth Namugga (NUP, Mawogola County South) echoed these sentiments, emphasizing the need for the government to adopt a more strategic approach in managing loan agreements, particularly those linked to infrastructure projects. She called for a clear plan to reduce the country’s borrowing, highlighting instances where previous loans had not been fully utilized or had failed to deliver the intended benefits.
In response, Deputy Speaker Thomas Tayebwa defended the loan proposal, arguing that the project’s significance, particularly in relation to Uganda’s burgeoning oil sector, justified the expenditure. “This road is not just any road; it’s an oil road, essential for transporting heavy equipment. The infrastructure we’re putting in place now is designed to last at least 20 years, much longer than typical road projects,” Tayebwa explained.
Tayebwa further warned that delaying the project could jeopardize the completion of critical infrastructure, such as oil storage facilities connected to the East African Crude Oil Pipeline (EACOP) project. “If we do not proceed with this road now, we risk undermining the entire oil infrastructure development, which could have serious economic consequences,” he added.
The directive to renegotiate the contract reflects Parliament’s growing scrutiny of infrastructure deals, particularly those involving international financing. As Uganda continues to expand its road network, especially in areas key to its oil industry, balancing cost-effectiveness with long-term strategic needs remains a critical challenge.
The Uganda National Roads Authority, along with the Ministry of Works and Transport, will now need to revisit the terms of the contract with CICO and the associated insurance costs, as they seek to secure a more favorable deal for the country. The outcome of these negotiations will be closely watched, as it could set a precedent for future infrastructure projects and their financing arrangements in Uganda.
