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Cabinet approves borrowing of Shs364 billion for oil areas

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The Hoima-Kaiso-Tonya road being constructed. The Albertine Region

The Hoima-Kaiso-Tonya road being constructed. The Albertine Region Sustainable Development Project is intended to develop local economic infrastructure and the human resource base. PHOTO BY FRANCIS MUGERWA  

By  Isaac Imaka

Posted  Friday, May 9   2014 at  01:50

In Summary

Information minister says the Albertine Region Sustainable Development Project will contribute to the rapid economic growth in the oil region.

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KAMPALA-Cabinet has approved a proposal to borrow $145 million (Shs364 billion) for the implementation of the Albertine Region Sustainable Development Project (ARSDP).

While addressing journalists at the Uganda Media Centre in Kampala yesterday, minister for Information Rose Namayanja said the money will be received from the International Development Association of the World Bank Group.

Infrastructure
The funds, she said, will be invested in the rolling-out of infrastructure and social services in the Buliisa and Hoima districts.

“The exploration of oil and gas and its related developments in the region have triggered a surge in population, urbanisation and pressure on infrastructure and social process on the region,” she said. “The project will greatly contribute to the rapid economic growth and poverty reduction in the Albertine region in particular and the country in general.”

Ms Namayanja said “considering the enormous anticipated benefits, Cabinet will call upon Parliament to give authority to borrow the said funds so that the roll-out of the ARSDP starts as soon as possible”.
That notwithstanding, the plan to borrow the money was met with criticism from civil society actors.

Anti Corruption Coalition Uganda executive director Cissy Kagaba told the Daily Monitor that it is illogical to borrow money for only the Albertine region because other oil producing countries did not prepare their communities through borrowing.

“The country’s priority is wrong because preparation for oil production is more than borrowing money and the money borrowed always ends up being stolen,” she said. “We have a big debt burden, why don’t they use the money we have been getting from oil signature bonuses instead of borrowing?”

External debts
According to the budget framework paper, Uganda’s total external debt exposure as of December last year stood at $6.4 billion (Shs16 trillion), of which $2.3 billion (Shs5.7 trillion) is loan commitments which have not yet been disbursed.

Parliamentary Forum on Oil and Gas chairman Michael Mawanda, also said the loan will face scrutiny in MPs because it is not feasible to borrow money for a region which is going to benefit from royalties.

About the project
Connectivity: Approved last year by government, the project is intended to improve connectivity to and within the region and develop local economic infrastructure and the human resource base that will help the communities tap into the oil and gas sector.

The project area: This includes Nebbi, Nwoya, Buliisa, Masindi, Hoima, Kibaale, Kyenjojo, Kabarole and Ntoroko districts but Hoima Municipality is not included because, the project report says, it is already included in the Uganda support to municipal infrastructure development project which is to start soon.

iimaka@ug.nationmedia.com