Construction works at Kabaale airport halted over funds.

Updated by Faith Barbara Namagembe at 10:26 EAT on Tuesday 21st 2023.

The completion of the new Kabaale international airport in Hoima hangs in a balance after the contractor laid down tools citing a lack of funds.  

The contractor, a joint venture of Israeli-British firms, Shikun & Binui International (SBI/Colas Limited) halted the construction works about two weeks ago following government’s failure to allocate more Shs 126 billion to complete the remaining works.

SBC communications manager Amos Muriisa said yesterday Monday that the contractor has engaged the government for more funding to help them expedite the completion process of the airport in vain. He says the contractor cannot continue work without funds.

According to him, during the two-year Covid-19 pandemic, the contractor faced a lot of challenges, especially in the variations of prices for construction materials yet they had not planned for such anomalies and eventualities that he says stretched their initial budget.    

According to Muriisa, the funds are needed to complete the control tower and other operations at the airport.

“I have to assure you that we’ve had claims for almost half a year in regards to variation of prices and some compliance according to the contractual obligations. We’ve had a deaf ear and there was no response until we reached a point where we couldn’t go on and decided to halt the work for a certain period of time as the matter is being resolved. So far, we’re almost 90 per cent site progress, so the work is almost done. Some few installations are remaining and they account for the 10 per cent remaining. But the fact that we have had some claims not attended to or not paid, or paid partially since last year in May or June and there have been some contractual variations. What we have we have in contract is not what we see on ground and this has led may be a need to first down and resolve this empest which has caused the project to halt,” said Muriisa. 

State minister for Works Fred Byamukama while on a field visit on Monday expressed shock that the contractor has halted work. According to Byamukama, government is currently investigating the contractor for allegedly exaggerating prices for some construction materials.

He says the contractor is suspected to be conniving with some top government officials to swindle money. Byamukama says recently, the contractor under unclear circumstances, demanded for an extra Shs 126 billion from the government to help complete works of the airport yet the government earlier allocated the contractor all the money needed to construct the airport.

The civil works involved €164 million but there came in a challenge because of the ‘mafialism’ we have in this country. People want to connive with the contractor for the government of Uganda to lose over €28 million which is about Shs 126 billion. That is a lot of money in the name of variation of prices. We agree prices increased during Covid and because of the Ukraine war but it didn’t increase as exaggerated. We want them to tell us if a sack of cement was Shs 30,000 how much did they buy it? It was increased to how much? When you ask them such a question, they keep quiet. So we cannot allow government to lose Shs 126 billion because of mafias who want to fill their stomachs,” said Byamukama. 

Byamukama explains that currently, the government is negotiating with the contractor on how construction works can resume, adding that if negotiations fail, government will consider terminating the contract and hire another contractor to finish the remaining civil works.

“The contractor laid down tools because we want what we call correlation of prices, the money which we didn’t budget for. We told him, yes, we can accept this money when we negotiate and we shall pay later. He refused and said that I want it from that money of the loan. This is a loan but later government of Uganda will pay, it is not free money. So we cannot allow government officials who are conniving with these contractors to steal government’s money and we cannot allow that that is why we’re here. We’re going to have a simple meeting with them and we harmonise this. If they refuse, we shall terminate their contract and get other people. We need value for money for this airport. And we want to close the first phase where we shall be able to receive the first aircraft with [oil] equipment, then later in the second phase we can think of passenger services. They also wanted to eat money in the fixed control tower, we have had where even the control tower in Entebbe jams and we use a mobile one,” added the minister. 

According to Byamukama, government cleared €264 million needed by the contractor for the entire project wondering why the project should stall, tasking the contractor to account for the money already paid.

“This money is not yet stolen, because we landed in the trick they wanted to steal – through the variation of price, the war in Ukraine and the Covid pandemic that the prices increased. That is the money we demand. We came to know about it. That is why we have refused by failing to pay it. Now they tell the contractor, lay down the tools, these people will be forced to pay. Government doesn’t move like that. We have paid them all the money they needed. Out of the €264 million all that money we have paid and we’re remaining with only €26 million. The balance has been paid to the contractor, we have not defaulted but now they saw once we have blocked the trick of stealing then the contractor laid down tools. Good enough he’s laying down tools when our civil works have reached 89-90%. We shall terminate the contract and get another person to complete the work which is remaining,” added Byamukama.   

Kadir Kirungi, Hoima LC V chairperson says halting the construction works at the airport will greatly affect people who had been employed by the contractor calling on the government to cooperate with the contractor and harmonise the issue.

“Economically, these workers were renting houses around Nyamasoga and Kabaale and some of them are not yet even paid. So those people being stopped abruptly like that the local providers are going to lose out a lot. The local providers were giving them food and were paying at the end of the month. Now before the month ends they are already dismissed. Automatically, they are not going to pay the local service providers and at the end those local service providers have got loans to facilitate their business. So it is a very big problem economically. 

The airport construction project is financed 85 per cent by UK Export Finance (UKEF) and 15 per cent by Standard Chartered bank. The value of the contract is €309 million of which €264 million. Once complete, the airport will have a platform with a capacity of receiving 4 Antonov’s 124 or Boeing 747-8 in one go. 

The airport is expected to handle both cargo and passenger flights because it has a multipurpose terminal building.

Construction of the runway, which is 3.5 kilometres long and 45 meters wide is 98 per cent complete, while the cargo terminal building, the limited-capacity passenger terminal building, the air rescue firefighting house, a power substation house and the air-ground lighting system are all between 89 to 90 per cent complete.    

The airport is one of the key support infrastructures for the next course of fast-paced activities leading to commercial oil production. Construction works at the airport commenced in April 2018 and are expected to be completed in June this year.

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