What you need to know:
- Mr Henry Musasizi, the State minister for Finance, revealed that the proposal followed a directive from President Museveni
The government yesterday defended its proposal to acquire 150,000 preference shares worth Shs202 billion in Roko Construction Ltd.
Addressing Parliament’s Finance Committee yesterday, Mr Henry Musasizi, the State minister for Finance, revealed that the proposal followed a directive from President Museveni.
In an October 19, 2019 letter, which Mr Musasizi tabled before the Committee, Mr Museveni said: “Sometime back, I met with the directors of Roko Construction Limited, who proposed that government acquire equity in their company. I welcomed their proposal, given that the government continues to spend a significant amount of money on funding government projects. Partnering with a construction company will lower construction costs.”
The President thereafter directed that the government negotiates with Roko Construction Ltd with a view of acquiring equity in the company, and that all the required legal procedures should be followed.
Mr Musasizi also told legislators that Roko had been faced with severe liquidity challenges that have constrained its ability to execute contracted projects and have adversely affected payments to its various suppliers and the financial sector.
“The company currently has projects in hand with signed contracts worth a total of Shs1 trillion, of which Shs696 billion are government of Uganda projects. Out of the Shs1 trillion worth of contracts, Shs292 billion equivalent of works remain uncompleted,” the State minister said.
“The consequence of the company’s collapse would, therefore, impact these projects negatively,” he added.
Mr Musasizi added that the Uganda National Association of Building and Civil Engineering Contractors (UNABCEC) estimates that the government would incur an additional Shs120 billion in placing these contracts with new contractors if the company was dissolved.
This followed a request from Mr Keefa Kiwanuka, the Finance Committee chairperson and Kiboga East County MP, to clarify on the matter.
Mr Muhammad Muwanga Kivumbi, the Butambala County legislator, who also serves as the shadow minister of Finance, wondered why the State minister did not have with him resolutions from Roko agreeing to sell preference shares to the government.
“Without them [resolutions], the rest of what we are doing is academic. He should quash our fears that he has seen the [resolutions] and has them [in a document] and give it to us,” Mr Kivumbi said.
Several legislators backed his concern. Mr Patrick Isiagi Opolot (Kachumbala County) said: “We can’t proceed because we expected due diligence to have been done [by the Finance Ministry]. Let us move step by step. We are all here to support this process but must move correctly.”
Ms Juliet Ssuubi Kinyamatama (Rakai District Woman) said the committee needed to push the government to come up with a clear policy on bailouts.
“They are not providing us with a clear policy. No resolutions. No nothing. The minister should commit to this meeting that there should be a [clear] policy [on the matter],” Ms Kinyamatama said.
Ms Jane Avur Pacuto (Pakwach District Woman), who doubles as the deputy chairperson of the Committee, asked the ministry to provide progress performance monetary reports as a way of guaranteeing that the investments government goes into is worth the effort, time and resources.
Mr Musasizi returns to the committee today to provide more clarity on the MPs’ concerns.