Uganda’s Cabinet agreed to borrow about €108 million from China for the construction of oil roads.
Uganda’s government will borrow the money from the Industrial and Commercial Bank of China to finance the construction of Hohwa-Nyairongo-Kyarusesa-Butoole and Masindi-Biiso, Kabaale-Kiziranfumbi roads.
“Upgrading and constructing the national oil roads will facilitate the efficient development of the strategic national oil resources,” said Denis Katungi, Uganda Media Centre communications and media relations manager.
Mr Katungi did not give more information on the interest rate the government will pay on the loan or the loan period.
He also added that the upgrade will add to the network of road infrastructure required for the movement of construction materials, consumables and workers from other parts of the country to the oil region.
Early last year, Uganda’s government signed a contract with China Railway Seventh Group to design and construct a 97km road connecting Kabaale-Kiziranfumbi, Masindi-Biso and Hohwa-Nyairongo-Kyarushesha-Butoole.
Uganda has a target of completing a large section of its oil roads across the country. The set target behind schedule with officials citing funding challenges.
According to a 2016 Cabinet directive to the Uganda National Roads Authority (Unra), by 2020, the 12 critical oil roads, about 700km in total, were supposed to be completed to facilitate the production of oil in 2023.
By 2021, 550km of the roads for which funding has already been obtained will be complete.
In May last year, the Minister of State for Planning David Bahati presented to Parliament a loan request of $456.37 million from China Exim Bank to fund the upgrade and construction of national oil roads.
“In order to achieve this target, key enabling infrastructure, such as road network, must be in place,” reads in part the letter addressed to the Speaker for the loan request.
As part of the Asian giant’s so-called Belt and Road Initiative, Uganda has received large credit lines from China in recent years. Construction of the oil roads will accelerate efforts to start crude oil production in Uganda, which has failed to take off 14 years after crude reserves were discovered.