The Public Accounts Committee (PAC) has called for an immediate halt to all funding for the International Specialized Hospital in Lubowa, citing it as a “ghost project” that is likely to cost Ugandans far more than the Shs286 billion already spent, with no tangible work to show for it.
This recommendation is part of the PAC report on the Auditor General’s Treasury Operations audit for the fiscal year ending June 30, 2023, which was presented by PAC Chairperson Muwanga Kivumbi. Kivumbi urged Parliament to suspend further funding until a special audit by the Auditor General is completed and reviewed.
“The Committee recommends that work on the Lubowa project be stopped until Parliament has reviewed the special audit report from the Auditor General. Those responsible for financial losses should be held accountable by refunding the misused funds. Furthermore, the owner’s engineer should face legal charges for issuing false completion certificates,” Kivumbi stated.
The PAC’s recommendations follow numerous irregularities identified in the project by the Auditor General. The report revealed that although seven promissory notes amounting to $133.6 million (approximately Shs476.5 billion) had been paid to the project’s financier, only 23% of the works had been certified by the government’s engineer, valued at just $57.5 million. This discrepancy suggests a potential overpayment of US$76.1 million (Shs286 billion).
Kivumbi warned that the government’s method of paying through promissory notes based on milestone certificates issued by the owner’s engineer—who lacks full access to the construction site—could lead to significant overpayments or payments for incomplete work.
The Auditor General also highlighted that, per the project agreement, payments are to be made upon completion of specific milestones and issuance of completion certificates by the owner’s engineer. However, it was revealed that the engineer’s certification was based more on progress reports from the contractor and consultation fees than actual physical work done, raising concerns about the integrity of the process.
While the Accountant General, Lawrence Semakula, told the PAC that all payments were backed by certification from the owner’s engineer and the government was obligated to honor promissory notes with binding due dates, the Committee was not satisfied.
Muwanga noted that the PAC was only provided with promissory notes, not the milestone completion certificates necessary for making payments.
The PAC also faced challenges in verifying the status of the project, as multiple attempts to visit the Lubowa hospital site were blocked by the project developer, leaving the Committee unable to confirm whether any work was being done.
“This is essentially a ghost project, and the risk of Ugandans losing money is very real. Parliament must address this issue urgently,” Muwanga emphasized.
The Ugandan government contracted Finasi-ISHU Construction SPV SMC Limited in May 2015 to design, finance, construct, and equip the International Specialized Hospital of Uganda at Lubowa.
In December 2018, the government signed a Promissory Note Purchase Agreement with the Ministry of Health, Africa Export Import Bank, Trade & Development Bank, and Barclays Bank Limited to fund the project up to $379.71 million. Parliament approved the project’s execution and funding in March 2019.
However, debate on the PAC report was postponed by Speaker Anita Among because no Finance Ministry officials were present in the plenary at the time of the report’s presentation.
