PAC asks finance ministry officials about delayed projects | New times
Taxpayers incur costs on projects for which the government has obtained loans but have not started or their execution has suffered significant delays.
Parliament’s public accounts committee questioned the Ministry of Finance and Economic Planning on the issue, which it said is a sign of poor planning.
The deputies and the office of the auditor general expressed concern that the government paid more than 2.9 billion Rwandan francs in commitment fees on various projects that have not yet started or whose rate of execution is very low. They describe these charges as unnecessary expenses for the government.
The issue was raised on Monday, September 27, as finance ministry officials responded to questions related to the mismanagement of public funds, as highlighted in the Auditor General’s report for 2019/2020.
Stalled projects include the Export Targeted Irrigation Project (ETI), the Rwanda Innovation Fund (RIF) and the Rusizi III hydroelectric project.
In March 2018, Rwanda and the African Development Fund (AfDB) signed a loan agreement worth $ 30 million to finance the creation of the RIF.
The project aimed to provide equity financing to small and medium-sized technology companies, train technology-oriented entrepreneurs in business planning and management, and increase awareness and awareness of intellectual property rights.
It was to support more than 150 technology companies at different stages and invest in around 20 early growth opportunities. It is expected to create over 2,000 direct jobs and over 6,000 indirect jobs over its 10-year life cycle.
The project is expected to be completed in 2022. However, it had not yet started in 2020 even though the government had paid over Rwf 60 million as a commitment fee for the delay in implementation.
According to the AfDB, the fund manager – Angaza – has signed an agreement with Rwanda to be a key participant in all stages of the innovation lifecycle, from start-ups to the initial public offering of companies.
Under the deal, the fund manager was required to raise $ 70 million from private investors to reach a target fund size of $ 100 million.
PAC President Valens Muhakwa said it is the taxpayers who suffer from such situations.
“The Ministry of Finance and Economic Planning, which pays these commitment fees, should work with the institutions responsible for the implementation of projects for which the country has requested loans so that they are executed on time for the benefit of of its citizens, ”he declared. .
Regarding the RIF, Jean-Bosco Ndayisenga, head of the division in charge of project management and monitoring at the Ministry of Finance, blamed the delay of the RIF on the Rwanda Development Fund (RDB), which is responsible for implementation.
Marie-Ange Ingabire, director general of the budget at the ministry, clarified that the financing of the project consisted of a loan that the government took out, and money that would be raised by the fund manager, noting that the latter was having difficulties to achieve it.
After realizing the problem, she said, it became necessary for the project to be restructured in order to help the fund manager to play his role in accordance with the implementation of the project.
Meanwhile, Ndayisenga said they expect this project to be implemented as the company has established an office in Rwanda, although there have been implementation delays resulting in high costs.
Regarding the Rusizi III hydroelectric project intended to produce electricity for Rwanda, Burundi and the DRC, Ndayisenga stressed that it has six donors, with a portfolio of around 489 million dollars.
He said the commitment fee charged to Rwanda amounts to around $ 17 million in ADB financing, indicating that this was the result of delayed negotiations between the parties to the project agreement.
Currently, he said, the project supervision company has been hired, various studies [for the project feasibility] have been completed, and the tender for the construction of a dam to generate 205 megawatts [to be shared among the three countries] is about to be offered.
For the Modern Irrigated Export-Focused Agriculture (ETI) project, he said he faced challenges, including slow performance of companies that received tenders for its execution.
Rwanda signed a $ 120 million (approximately Rwf 120 billion) line of credit with the Export-Import Bank (EXIM Bank) of India in October 2013 to implement the ETI project in the sectors of Mahama, Mpanga and Nyamugali in Kirehe district, eastern province.
According to the Rwanda Agriculture Board, among the challenges that have hampered project implementation is the pressing requirement that 75 percent of the value of goods and services needed for the project be imported from India, and some Indian companies that were involved in the project went bankrupt.
It was planned to irrigate at least 7,000 hectares, to set up a tomato processing plant with a capacity of 26,000 tons, a 12 MW solar power plant and a center of excellence in agricultural mechanization, among other elements. .
According to the Auditor General’s report, the project, which was due to be completed by 2017, was behind schedule, with only 877 hectares or 12% of the planned agricultural land having been brought under irrigation in Mpanga in October 2020, while part of the project the components had not yet started.
As of July 31, 2020, the government had incurred $ 8.6 million in expenses for EXIM Bank of India, including principal, interest and commitment fees.