UGANDA’S MPS ALLOW GOVERNMENT TO GET SH48B LOAN FOR CHINESE BACKBONE PROJECT

Mergers, Acquisitions and Financial Results

Parliament has allowed the Government to borrow $30m (about sh48b) from China to improve the communication sector. The money, to be borrowed from the Export and Import Bank of China, will fund the National Data Transmission Backbone Infrastructure project.

"The purpose of the project is to improve the communication infrastructure in the country, reduce the cost of communication and improve communication within the Government," the finance minister, Ezra Suruma, told Parliament on Tuesday.

Under the first phase of the project, E-Government infrastructure will be established in Kampala, Entebbe and Jinja, according to the national economy committee that scrutinised the loan request. The committee added that the project would be extended to other districts by 2010.

The chairman, Ibrahim Lubega Kaddunabbi, noted that through the E-Government infrastructure, the flow of information to citizens would be timely and credible.

He explained that district headquarters would also be connected to the Internet and information and communication access points would be established at sub-counties.

However, the legislators were concerned that the Government had already signed a memorandum of understanding with a Chinese contractor, Huawei, who had started working on the project before Parliament had approved the loan.

They further noted that the loan terms were not in line with the National Debt Strategy and the International Development Association acceptable concession terms, which require all such loans to have a repayment period of 40 years with 10 years grace period. The loan repayment period is 40 years with a five-year grace period.

(SOURCE: New Vision)