Luwero — Authorities in Luwero District are grappling with a sh740 million debt related to road works after the Ministry of Finance, Planning, and Economic Development rejected their request to settle the amount.
The debt dates back to 2014, when the district contracted Busenvi Enterprises Limited for sh522 million to construct three access roads--Kagembe-Kawumu-Mawale, Kagugo-Namyeso-Bakijjulula, and Mawu-Kasambya--under the District Livelihood Support Programme (DLSP).
However, the contractor exceeded the contract sum, carrying out works not captured in the bill of quantities. The district declined to pay for the extra costs. The contractor petitioned the Uganda Institute of Professional Engineers, which certified the works and directed Luwero to pay sh216 million and adjudication costs of sh5.2 million.
In 2016, High Court Judge Anna Mugenyi ordered the district to pay these costs and an annual interest of 26%. By 2024, the debt had accumulated to sh740,820,158. On October 2, 2024, the Luwero District Chief Administrative Officer (CAO) petitioned the Ministry of Finance to settle the debt, arguing that the project was executed by the Ministry of Local Government.
However, Ramathan Ggoobi, the Finance Ministry Permanent Secretary, declined the request. "In view of the above, you are advised to prioritize this payment using your local revenue collections over the medium term. The purpose of this letter is therefore to guide you as above," Ggoobi stated in a letter to the CAO.
In response, CAO Innocent Asaba Birekayaho described the guidance as "unfair" and revealed that he has written back to the Finance and Local Government Ministries to reconsider their position. "Although the contract was signed by the district, the executing agency was the Ministry of Local Government, which should cater for the court costs," he said.
Luwero District Chairman Erastus Kibirango expressed concern over the financial strain on the district. "The district runs a meager budget from local revenue, and paying it in court costs may cripple service delivery," Kibirango said. The district collects UGX 2.8 billion annually in local revenue, which has been allocated to other projects.
Busenvi Enterprises Limited has not commented on the delayed payment, but there are fears the contractor may resort to impounding official district vehicles to recover the money. In 2022, the contractor secured a garnishee order to freeze the district's Stanbic Bank account.
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However, Lady Justice Mugenyi blocked the move, ruling that executing such an order on a government account containing consolidated funds for salaries would be illegal. "For that reason, whereas it's in the interest of justice that the appellant (contractor) be paid his outstanding debt, the only hiccup is the mode of execution, and the court won't sanction illegalities," the judge ruled.
