AG raises concern over sh500b contractor arrears, delayed compensation and road works

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The Auditor General (AG) has raised concerns over increasing arrears for contractors on major infrastructure projects.

In a report to Parliament, AG Edward Akol noted that as of June 30, 2025, outstanding arrears owed to contractors for completed road works under the works ministry and the former Uganda National Roads Authority (UNRA) had reached shillings 500.3 billion, of which 73.9 billion represents interest accrued due to delayed payment of certified works.

The AG attributes the arrears largely to inadequate budget allocations and delays in fund releases.

“Failure to settle these obligations on time exposes the Government to litigation and further financial losses,” he warns.

Akol said the delays have already forced some contractors to halt work, leading to deterioration of completed road sections and escalating maintenance costs.

The auditors recommend that the Government prioritise settlement of arrears through closer engagement with the Permanent Secretary to the Treasury.

Stalled road projects

The report reveals that out of 67 road projects valued at over shillings 10.6 trillion, findings showed widespread implementation delays, with 28 projects worth shillings 3.5 trillion experiencing delays from six months to over three years.

Akol said 13 projects had been abandoned or suspended. Among the affected projects are the Mityana–Mubende–Kyejojo road, Busega–Mpigi Expressway, Najjanakumbi–Busabala road, Ntungamo–Kabale–Katuna road and Olwiyo–Pakwach road.

“Delays stem from contractor capacity constraints, late government payments, slow acquisition of right-of-way, and delayed compensation of affected communities,” the report says.

As a result, Akol said the Government has already paid $17.7 million in commitment charges on undisbursed loans due to slow project implementation.

The auditors advised the works ministry to strengthen co-ordination with Parliament and the finance ministry to ensure timely funding and avoid additional costs.

Compensation delays hamper infrastructure expansion

Akol noted that Land acquisition remains a significant bottleneck in infrastructure development.

For four major projects: Bukasa Port, Standard Gauge Railway (SGR), Tororo–Gulu metre gauge rehabilitation, and Gulu Logistics Hub, Akol said a total of 19,082 Project Affected Persons were assessed for compensation valued at shillings 848.46 billion.

However, by June 2025, only 59 per cent had been paid, leaving 7,767 individuals owed shillings 533.23 billion yet to be cleared.

He also said seven donor-funded projects, 6,597 PAPs, valued at shillings 320.139 billion, remain uncompensated. The audit also flagged land management challenges, including over 506 acres acquired for the SGR project that remain untitled and nearly half of the land titles under former UNRA projects that have not been subdivided and returned to owners.

“The delays in compensation and land titling expose projects to land disputes, encroachment, reoccupation by compensated residents, and rising costs,” the report cautioned.

To address the challenges, the Auditor General recommended the timely release of compensation funds and improved coordination among government ministries, departments, and agencies to accelerate land titling and project implementation.

He said the findings underscore growing concerns over the financing and execution of infrastructure programmes, even as the government continues to prioritise road and transport investments as critical drivers of economic growth.

“The government must act swiftly to clear arrears and compensate affected communities to safeguard both taxpayer money and Uganda’s infrastructure ambitions,” the Auditor General concluded.