Government has asked Members of Parliament to support the proposal to buy shares in ROKO Construction Limited to save ongoing construction works.
The Minister of State for Finance (General Duties), Hon. Henry Musasizi recently tabled a proposal for the government to purchase 150,000 preference shares in Roko Construction Limited worth Shs202.13 billion. The request is currently before the Committee on Finance for scrutiny.
However, MPs have expressed mixed reactions over the proposal with many saying it is an investment decision that will lead to loss of public funds.
While he appeared before the committee on Tuesday, 19 July 2022, the Deputy Solicitor General, Pius Biribonwoha warned that if the proposal by the Ministry of Finance to spend Shs202.13 billion is not supported, many ongoing government works will stall.
ROKO is currently constructing the Parliament of Uganda’s new chambers at a cost of Shs179 billion and the Ministry of Finance building among others.
“I would like to invite MPs to look at this as a strategic intervention because of the contagion effect that you would have if you did not intervene in trying to assist this company to get back on its feet,” he said.
Butambala County Member of Parliament, Hon. Muwanga Kivumbi rejected the call by government stating that the failure to bailout Roko will only affect five commercial banks that extended Roko, bank guarantees worth Shs130 billion out of the 21 commercial banks in Uganda.
“This is money that is going to be wasted; it is calling on Parliament to sanction a deal that is bad. Members are divided about it but we shall have the opportunity to present in the House and convince MPs to reject it,” he said.
Information before the committee indicates that as of 31 May 2022, Roko’s debts were equivalent to Shs202.419 billion with DFCU Bank, ABSA Bank, and Bank of Baroda.
Charles Byaruhanga, Technical Adviser of Budget at the Ministry of Finance informed the committee that the Bank of Uganda had warned of the possible effect the refusal to bailout Roko would have on Uganda’s banking sector.
“We have had discussions with Bank of Uganda concerning Roko Construction’s state of indebtness on the financial sector. Their indication to us is that any collapse of Roko will have serious ramifications on the financial sector.” Byaruhanga said.
The State Minister of Finance, Hon. Henry Musasizi said the committee should consider the request to have preference shares since government policy does not allow for ownership in private companies.
“Our interest will be safeguarded by having representatives on the board. We are proposing to appoint a chief internal auditor to manage risks,” Musasizi said.
He added that government will have veto powers on acquisition of loans and sale of assets among others.
The Chairperson of the Committee, Hon. Keefa Kiwanuka said that government has addressed some of the fears of the members and they are now headed to writing their report.
“Government will have veto power on loans, budgets and assets of Roko. We have also agreed that government will recommend to Roko the chief internal auditor who will approve most of the documents,” he said.