Nearly half of the funds allocated to the Ministry of Works for construction of roads will be used to pay debts for current development projects.
The budgeted funds for fiscal year 2012/13 will be used to pay outstanding debts accrued during the just ended financial year—casting doubt about the future of the new projects earmarked in the next twelve months.
By mid June this year the government had disbursed Sh351.977 billion out of the Sh607.743 billion allocated for development expenditure in 2011/12, thus creating a debt of Sh420 billion.
According to budget estimates unveiled on Thursday by Minister for Works Dr John Magufuli, Sh 693,948,272,000 (Sh 693.95 billion ) has been allocated for development expenditure while Sh 329,085,354,000 (Sh 329.10 billion) is recurrent expenditure, bringing the sum of Sh 1,023,033,626,000 (Sh 1.023 trillion) as the total budget for the ministry in the 2012/013 financial year.
According to Minister Magufuli, out of Sh 693.95 billion allocated for development projects, Sh 292.90 billion is domestic funds while Sh 397.10 billion is foreign aid.
A quick observation made by The Guardian shows that most projects to be implemented in the 2012/2013 financial year were either commissioned in the past financial year or had already been decided by the government but its implementation failed to kick off due to lack of funds.
This was aired by Mpanda Central MP Said Arfi (Chadema) who expressed concern that the government owed contractors billions of shillings in construction works carried out in the past financial year.
He said some contractors had completed their assignments but were still demanding their money from the government while others were still on sites but construction work had stalled due to lack of funds.
“Let’s find a way to settle all the debts engulfing the ministry as there debts amounting to hundreds of billions of shillings,” said Arfi, who is also the Chadema vice-chairman (Mainland).
Arfi blamed the Ministry of Finance for its reluctance to release money passed by Parliament for the Ministry of Works, arguing that despite Parliament endorsing funds for the construction sector the Treasury has been drugging its feet to release them.
The opposition MP urged that5 endorsed funds for the construction sector be ring fenced to avoid being reallocated for other activities. John Cheyo (Bariadi East –UDP) similarly made the same suggestion, calling upon the Treasury to release funds passed by Parliament on time.
He said delays in releasing funds to finance construction projects created unnecessary costs for the government due to price rises and persistently high interest charges.
When tabling in Parliament the report on the performance of the government in the infrastructure sector from
April 2011 and April this year, Peter Serukamba, the chairman of Parliamentary Standing Committee on Infrastructure, said most major road projects commissioned in the 2011/2012 financial year were being carried out on credit. Serukamba told the House in April this year that until March, three months before tabling the new budget, the government had disbursed Sh 351.977 billion out of Sh 609.743 billion allocated in 2011/2012 budget.
A huge chunk of money disbursed in the past financial year has been spent in offsetting debts that accumulated while implementing the previous budget ( 2010/2011) amounting to Sh 420 billion, the committee chairman noted.
“ If the government has so far disbursed only Sh 351.977 billion out of Sh 607.743 billion allocated for roads in this financial year while the same ministry had debts amounting to Sh 420 billion accumulated in the previous budget the simple interpretation here is that most roads projects being implemented currently are carried out on credit,” the MP had asserted during the April parliamentary meeting.
The committee chairman stated in his report that until March 2012 the government owed construction companies a total of Sh 331.501 billion in domestic funds.
This financial gap had forced nine contractors building roads in various corners of the country to suspend construction while 14 others had slowed down the pace of project implementation, he said.
Road projects whose implementation had been suspended due to lack of funds include Mbeya-Mkongorosi, Lwanjilo- Chunya, Isaka-Lusahunga, Isaka-Ushirombo, Kanazi-Kizi-Kibaoni, Sumbawanga-Kanazi, Mwigumbi-Maswa-Bariadi and Jetcorner-Vituka-Davis Corner.
Two contractors building Handeni-Mkata and Nyanguge-Musoma roads had issued a notice intending to suspend construction. “This trend is not good at all,” Serukamba was quoted as stressing in his report.
During the same April parliamentary meeting the then Deputy Minister for Works Dr Harrison Mwakeymbe promised MPs that the ministry would not come up with new projects in the 2012/2013 financial year.
The major focus in the new budget would be placed on settling debts accumulated in the past financial year as well as completing commissioned ones, he had declared.