Government has decided to borrow up to Shs1.23 trillion for Kampala-Jinja expressway.
The initial project preparation commenced with a feasibility study in 2010 before it hit a snag due to unknown reasons.
The money, $229.47m (about Shs846.4b) is to be obtained from the African Development Bank and $105m (about Shs387.3b) from the French Agency for Development.
Both loans have a grace period of eight years and 25 years maturity period.
However, the tentative interest for the African Development Bank is 2.25 per cent with a commitment fee of 0.25 per cent for non-disbursed amount.
On the other hand, money from the French Development Agency will attract a tentative interest of 1.5 per cent while failure to pay commitment fees will attract a 0.5 per cent annual interest on non-disbursed amounts.
The loan request was presented by Mr David Bahati, the State minister for Planning yesterday.
The total cost of the project, which encompasses the Kampala Southern Bypass is Shs5.48 trillion ($1.48b) of which government will mobilise $301.17m.
The remaining balance will be mobilised by the private sector mainly through project finance or Capital market finance.”
A March 5, letter by Mr Keith Muhakanizi, the Permanent Secretary to Treasury, that Daily Monitor has seen indicates that Mr Muhakanizi is asking for an interface with MPs to defend the loan.
“As you are aware, Uganda’s road network is a key driver of national and regional economic growth. It provides core transport linkages to land-locked countries of Rwanda, Burundi, Democratic Republic of Congo (DRC), and South Sudan,” reads Mr Muhakanizi’s letter partly.
It adds: “Government of Uganda is keen to leverage this national advantage to strengthen its trade hub to boost economic growth.”
Construction is expected to last five years.