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Roads being constructed on credit, House report says

22nd April 2012
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Major road projects commissioned in the current budget estimates are being carried out on credit, the Parliamentary Standing Committee on Infrastructure has declared.

Tabling the committee report on the performance of the government in infrastructure from April 2011 to early this month, committee chairman Peter Serukamba said that by late 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 estimates.

Worse, large chunks of money disbursed this financial year have been spent in offsetting debts accumulated while implementing the previous budget (2010/2011), amounting to Sh 420 billion. “If the government has so far disbursed only Sh 351.977 billion out of Sh 607.743 billion allocated for roads for 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 road projects being implemented currently are carried out on credit,” Serukamba stressed.

The committee chairman states in his report that until March 2012 the government owed construction companies a total of Sh 331.501 billion in domestic funds.

He said that such a financial gap has forced nine road contractors in various regions to suspend construction while 14 others have slowed down the pace of construction.

Road projects whose implementation has 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 for Handeni-Mkata and Nyanguge-Musoma roads issued a notice of intention to suspend construction. “This trend is not good at all,” Serukamba declared.

Speaking on ATCL, Serukamba said the committee was saddened by the manner in which the government issued its guarantee to ATCL so that it could lease an aircraft- Airbus 420-214 from Wallis Trading of Lebanon for six years.

The committee raised serious concern on the agreement between ATCL and the company, considering the fact that while the lease agreement was signed on October 2007 the government guarantee was issued on April 2, 2008, almost six months later.

The committee stated that the lease agreement was entered between the two parties against the technical advice of ATCL technicians. The technicians, according to the report, had said it was not advisable to lease the aircraft that would fly for six months before going for major maintenance (Check C).

It is stated in the report that after the lease agreement was signed the aircraft stayed in the hands of the leasing company for about seven months waiting government guarantee.

The aircraft flew in the country on May 2008 and operated for only six months before flying on July 2009 to France for Check C at ATCL cost. However, the plane was not brought back to the country after ATCL failed to settle the debt amounting to $3,009,495. The government guaranteed the leasing at $60,000,000 as of June 30, 2011.

Due to ATCL’s failure to pay the debt the government was forced to pay Sh 121 billion that included its guarantee and the interest rate. Serukamba said the trend was detrimental to the country’s welfare.

SOURCE: GUARDIAN ON SUNDAY
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