Government is to intensify its scrutiny of companies that bid for construction works, and has said it will kick out from the tendering process those which fail to demonstrate their ability to raise funds, and withhold payment to those who do shoddy works.
This process will start with works for the Kampala-Jinja express highway. Officials from both the ministry of Finance and the Uganda National Roads Authority (Unra) have said payments to the contractors will be on their ability to avail a road that is functional and useable to the public.
Allen Kagina, the executive director at Unra, said although the road’s estimated cost is about $1.1bn, the private sector will have to show ability that it will be able to mobilize funds.
“Since it is a public private partnership (PPP), government will contribute $400 million, the private sector will need to raise $600 million and they will recover that money in 25 years,” she said.
According to Kagina, under the new arrangement, the contractor will be in charge of regular maintenance, evacuating accidents for the period Unra and the contractor agree on.
She further explained that under the arrangement, there will be no shoddy works as companies will own the roads as they will be responsible for regular repairs at their own cost.
Unra explained that of the $600million, 20 per cent will be the company’s equity, then it should be able to mobilize the rest from its business associates. The government will compensate landowners.
She was addressing the press and bidders during the receiving and opening of the prequalification applications for the Kampala- Jinja Express highway project. A total of eight companies showed interest.
“We have adopted the opinion of implementing this project under a PPP to leverage innovation and expertise of the private sector as well as widen the financial option for road infrastructure,” she said.
Kagina added: “The PPP is expected to provide an opportunity for the government to form new partnerships and attract new forms of private capital into the country. We are also working with partners to ensure part of the contracts are [priced] in the local currency.”
Unra is expected to choose a contractor before the end of the year.