Economists caution gov't against acquiring stake in Roko

Policy analysts and economists have urged the government to be careful in its plans to inject a Shs 202 billion in the struggling Roko Construction Company.

Government revealed earlier last week that it is planning to bail out Roko Construction Company by buying 150,000 company shares, which are worth Shs 202 billion.

The plan was revealed by Henry Musasizi, the state minister for Finance.

He tabled government's plan on the floor of Parliament.

More details on this proposed bailout have now emerged, indicating that the planned purchase of shares by the government will also mean government injecting operation capital as well as inherit a Shs 130 billion liability from the construction company.

Speaking to the Nile Post, analysts advised the government to audit Roko construction thoroughly before committing to buy the shares or risk going down with it.

Policy analyst Godber Tumushabe said that preliminary reports show that government only owed Shs 1.8 billion to Roko for the Uganda Cancer Institute which was also paid.

Tumushabe said the resurrection of this proposal goes beyond just acquiring the 150,000 shares.

"The Shs 202 billion will pay off shareholders, then the government will have to look for money for operations and also bear the Shs 130 billion liability of the company," Tumushabe said.

He said that it has become a tendency of the government to pick and choose who to help without national consideration.

Dr Fred Muhumuza said that it is starting to look like the government is back tracking on her efforts on privatisation and liberalisation .

Muhumuza pointed to the construction company’s internal governance struggles questioning whether the government can do any better if it acquires majority shares.

He advised the government to evaluate the organisation before a final decision is made.

Nile Post understands that Roko has welcomed the government's proposal with open hands, and are banking on their reputation and experience in the market.

The company said they are currently negotiating contracts worth Shs 1.2 trillion in the sectors of oil and gas, tourism and government infrastructure sector.

Recently, Roko was dragged to court by Roofings Limited over non-payment of Shs 2 billion.

Nile Post also understands that Parliament has referred the matter to the parliamentary Committee on Finance for scrutiny.