Ministers Clarify Isimba Dam Loan

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In short
Kiwanuka explained that the lender initially wanted the biggest distributor Umeme to be part of the agreement, which was not acceptable to the borrower.

The parliamentary committee on the national economy and natural resources has tasked the Finance and Energy ministers to explain why parliament was never consulted on the Isimba dam loan.  

In 2013, the government entered a bilateral agreement with China to provide funds through the Export-Import-EXIM Bank to among other projects construct Isimba dam.
 
Last week, the committee ordered Aston Kajara, the finance state minister in charge of privation and his energy counterpart Simon D'Ujanga to appear with their seniors and a written statement explaining why the executive comes to parliament when they have already acquired monies for retrospective approval.

On Tuesday, Maria Kiwanuka, the minister of finance and economic development appeared before the committee on the national economy and natural resources as requested by the legislator. The committee chair Xavier Kyoma asked the minister to explain, why parliament's approval is needed when a contractor was already procured and work is ongoing.
 
Kiwanuka tried to dodge the question, but legislators insisted that she answers. The ministry's legal advisor came to the rescue of the minister saying the Public Procurement and disposable of Assets (PPDA) Act allows the executive to fore go parliament if it is a bilateral arrangement between two countries.
 
 Section four of the Public Procurement and disposable of Assets (PPDA) Act says that in cases where two countries have entered a bilateral arrangement, the agreement will supersede the provisions of the Act. However, the MPs wouldn't have this. They insisted that as long as it is a loan and not a donation, parliament has to approve it.

But Keith Muhakanizi, the Permanent secretary of the finance ministry said the MPs were mixing issues. He asked the members to distinguish between procuring a contractor and acquiring a loan adding that, what government did was procure a contractor but hasn't yet acquired the loan from China.


In a written statement presented to the committee, the ministry also noted that it had carried out the procurement of the contractors and consultants of the project which they say falls in their mandate and doesn't require parliamentary approval. The other area of contention was the inclusion of power distributor Umeme in the loan agreement. 

The MPs wanted Umeme excluded from the deal given the fact that parliament recommended the termination of Umeme's contract. But the MPs were told that the agreement was amended and Umeme excluded. Kiwanuka explained that the lender initially wanted the biggest distributor Umeme to be part of the agreement, which was not acceptable to the borrower. 

She said that government stood their grounds and insisted that Umeme can't be part of the agreement when there are government companies.  Kabagambe Kaliisa, the energy ministry permanent secretary said Exim Bank asked government to give them a statement on Umeme but also confirmed that they agreed to exclude Umeme from the agreement.


The loan is payable in 20 years including a five year grace period at a fixed interest rate of 2% per annum and the 183MW dam is expected to be completed in 40 months