Entebbe expressway loan repayment starts next month

BY: Eyalama In Business On

The government will start repaying the Kampala-Entebbe expressway loan next month. The loan worth $350 million (approximately Shs 1.2 trillion) was acquired from the Exim Bank of China.

In May 2011, government through ministry of Finance signed a loan agreement with the Exim Bank to finance the construction of the 51.4km Kampala-Entebbe expressway. The four-lane expressway comprises two road sections – a 36.94km-long section and a 12.68km-long link road.

But recently Finance minister Matia Kasaija told Daily Monitor that government at the moment has no money to start repaying the loan but has planned for it next financial year.

“We cannot afford to pay any money on May 22 because there is no money at the moment but we have budgeted for next financial year,” Kasaija is quoted as saying.

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Kasaija said there was an oversight on the part of ministry at the time of acquiring the loan. He said the loan was acquired with government not thinking about where the money will be got from to repay the loan. Exim Bank has been disbursing the money in installments over the last 7 years. The first disbursement was made on 29th June 2012 and the last one is expected on May 21 this year.

According to the loan agreement, the government is now obliged to commence repayment on July 21 this year.  The loan repayment schedule will run from July 21, 2019 to January 21, 2032. In the 13-year repayment period, the government plans to pay $26.8 million (approximately Shs 101.8 billion) a year.

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It will however pay it twice a year at $13.4 million (approximately Shs 51 billion) every six months. Initially, the government had planned to repay the loan through revenues from the road toll on the Entebbe expressway upon its completion.

However, the road toll system on the Entebbe expressway has not been implemented and the road was opened to traffic in June 2018.
Therefore, ministry of Works and Transport launched the Road Tolling Policy last April. The policy provides a framework necessary for regulation, management and operation of toll roads in Uganda.

The ministry also tabled the Roads Amendment Bill, 2018 in parliament to among others, facilitate a legal regime for road tolls in Uganda. The Road Tolling Policy is expected to operationalize the Bill, once it is enacted into law.

The Bill was brought for first reading on 26th September 2018 and referred to the Physical Infrastructure Committee for scrutiny. The committee has not presented its report to the House. To date, parliament is yet to pass the Bill.

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