Uganda is experiencing a daily loss of sh2.2 billion, incurred in the form of interest charges due to delayed payments to project contractors, according to the latest Auditor General’s report for the financial year 2022/2023. The report, presented to Parliament by Auditor General John Muwanga, highlights outstanding payments totaling 804.26 billion Shillings within the Uganda National Roads Authority (UNRA) and Ministry of Works and Transport.
Out of the total outstanding amount, UNRA accounts for sh588.77 billion, while the Ministry of Works and Transport has 215.49 billion. This results in a daily interest payment of 1.61 billion by UNRA and 590.38 million Shilling by the Ministry of Works and Transport, as of June 30, 2023.
The audit report emphasizes that long outstanding payables indicate poor budgeting, posing risks of litigation and penalties for delayed payments. UNRA, for instance, paid 11.93 billion Shillings in interest charges for Interim Payment Certificates (IPCs) not paid within agreed timelines, attributed to inadequate budget provisions for settling domestic arrears.
Executive Director of UNRA, Allen Kagina, previously explained to Parliament in November 2022 that arrears for unpaid contractors had been accumulating over years. She mentioned a 145.75 percent increase in arrears from 215 billion at the end of the financial year 2020/2021 to 528 billion at the end of the financial year 2021/2022. Kagina attributed this to a 77 percent budget suppression of the approved Government of Uganda budget.
The Auditor General advised accounting officers to collaborate with the Ministry of Finance to secure additional funding for settling these domestic arrears.
In addition, the Auditor General raised concerns about commitment charges incurred due to delayed absorption of loans from development partners. The audit report notes a total of undisbursed loan funds amounting to US Dollars 458.759 million in three donor-funded road projects. Delays in procurement processes and lengthy approvals of project activities by development partners have contributed to this situation.
As a result, the government has accumulated commitment fees of US Dollars 10.63 million on undisbursed donor funds since the effective dates of the projects. The Auditor General recommended engagement with development partners and stakeholders to implement measures reducing delays in procurement processes and project activity approvals.
The audit report also highlighted significant losses incurred by the Uganda Railways Corporation, increasing by 9.2 percent from the previous year’s loss of 32.22 billion Shillings despite a revenue increase of 13.83 percent. The Corporation faced losses due to the theft of materials or equipment on the Rehabilitation of Tororo-Gulu Railway line, amounting to Euros 3.083 million and US Dollars 3.76 billion.
Muwanga advised the Corporation to devise strategies for improving revenue generation and addressing weaknesses in operating and profitability, ensuring sustainability in service provision.