By Mulengera Reporters
The government’s request for an additional UGX66.126 billion in insurance fees for a UGX621.171 billion loan to extend electricity to industrial parks has raised suspicions among Members of Parliament (MPs). Lawmakers accused some officials of deliberately omitting insurance cover from loan agreements as a scheme to siphon taxpayers’ money.
The concerns were raised by Buliisa County MP Allan Atugonza during a meeting between Parliament’s National Economy Committee, the Ministry of Finance, and the Ministry of Energy to scrutinize a request to borrow an additional €17,293,000 (UGX66.1Bn) for payment to China Export & Credit Insurance Corporation (SINOSURE). The requested funds would cover a 7.60% insurance premium for a loan obtained from the Export-Import Bank of China.
“There is a growing trend with SINOSURE, where loans appear competitive at first, but later, officials return seeking additional funds for insurance. You recall the Masaka-Kyotera Road, where we faced similar issues before approving insurance. Now, we have another SINOSURE case, and we suspect an avenue is being created to siphon money from the government. How can someone claim to have forgotten insurance five years after securing a loan?” Atugonza questioned.
In August 2024, Parliament approved a similar loan for the Masaka-Mutukula Road, which resulted in an additional cost of UGX64.78Bn, pushing the total project cost from UGX691.68Bn to UGX751.002Bn due to an overlooked insurance cover. If the latest request is approved, the total loan for the electricity project will rise from €162.4 million (UGX621.171Bn) to UGX683.333Bn.
Beyond the insurance issue, MPs also questioned the impact of previous loans meant to electrify industrial parks. Buvuma County MP Robert Migadde criticized the extension of electricity as one of the worst-performing projects ever approved by the National Economy Committee.
“The Ministry of Finance has some of the worst-performing loans, especially for the Namanve Industrial Park. There is nothing to show for the money borrowed in 2020, yet we are being asked to approve more funds. This Committee must visit Namanve before approving any new loans. It’s embarrassing not only for us but also for the Ministry and the Government at large,” Migadde said.
Nabilatuk Woman MP Sylvia Awas also insisted that a field study should be conducted to assess progress before approving additional funds.
“We need to physically inspect what the previously approved money has done. I am on the National Economy Committee, yet my district Nabilatuk—especially its institutions—still lacks electricity. This is unacceptable,” she stated.
Similar concerns were raised by Bbale County MP Charles Tebandeke, who urged Parliament to rescue Ugandans from the increasing debt burden.
“It is this Committee’s responsibility to save Ugandans from excessive borrowing. The accumulated interest is beyond our control, and even beyond the Executive’s control. We keep approving loans, but there is no evidence of the projects on the ground. Where does this money disappear to?” Tebandeke questioned.
Katikamu South MP Hassan Kirumira criticized the government for extending electricity to industrial parks while ignoring nearby villages, even when power lines pass through their land.
“We understand that electricity is meant for industrial parks, but how does it just ‘jump’ over villages? The power lines pass through people’s land, yet the communities are left in darkness. How do we address this unfairness?” Kirumira asked.
Despite the MPs’ resistance, State Minister for Finance Henry Musasizi defended the loan request, arguing that it aligns with Uganda’s Vision 2040, which aims to increase manufactured exports from 4.2% to 50% by creating an enabling environment for industrial investment.
“The establishment of industrial parks is a key strategy to attract private investors and promote Uganda’s industrialization. To operationalize these free zones, electricity must be extended to support key industrial parks in Wobulenzi, Kaweweta, Luwero, Kapeeka, Mbale, and Sukuru,” Musasizi explained.
He further justified the SINOSURE insurance premium as a loan condition imposed by the lender to mitigate repayment risks.
“This insurance is a prerequisite for securing commercial loans from China Export & Credit Insurance Corporation. It safeguards against sovereign defaults and payment delays, ensuring the lender is protected in case of non-payment by the Government of Uganda,” Musasizi added.
The government also highlighted the role of the Uganda Investment Authority in establishing 22 industrial and business parks to create jobs and enhance value addition to locally available raw materials. To achieve this, power, water, and road infrastructure must be developed within the parks.
“To deliver the required electricity, we need to extend the transmission grid, install new substations within industrial parks, and invest in networks linking power generation to these high-demand areas. This will ensure industrial parks are fully operational,” Musasizi noted.
However, Vice Chairperson of the National Economy Committee, Robert Migadde, reiterated that the loan would not be approved until a physical inspection is conducted.
“We will not approve this borrowing until we visit the industrial parks and assess progress. Unlike previous loans, this one will require further scrutiny and another engagement with the Ministry of Energy,” Migadde stated.
The controversy surrounding the UGX66.1Bn loan insurance request highlights growing concerns about government borrowing, transparency, and project accountability. As MPs push for greater oversight, the fate of the loan now hinges on whether Parliament will conduct an inspection before approving additional funds-Parliament Watch. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
