Dispelling the narrative on road construction costs in Uganda While many have been quick to compare road projects in Uganda with those in other countries, they have not gone in detail to take note of what makes the projects different, the Uganda National Roads Authority Executive Director says

By Allen Kagina

By comparing the major infrastructure projects implemented in Uganda with projects implemented in other countries, different authors in all media (print, broadcast and social media) have, missed the  many distinct disparities between projects in Uganda and in other countries that include (i) Actual Project Costs (ii) Project Scope (iii) Time value of Money (timing of implementation); (iv) market conditions or prices of project inputs such as bitumen, fuel, among others; which makes a mere comparison of the unit costs without taking into consideration of these differences misleading and alarmist!

Project Costs

Indeed, comparisons of Ugandan projects with incorrect costs for projects in the other countries have been made. For instance, the Nairobi-Thika highway project has been compared with the Kampala-Entebbe Expressway and indicated to have cost $360m yet the reference price at tender award was $500m excluding variations during project implementation. Furthermore, comparison was made of the Source of the Nile Bridge with Shanghai’s Napu Bridge and Nigeria’s Lekki-Ikoyi link bridge in Lagos whose projects costs were reported to be $119m and $79m respectively. The actual project costs for Shanghai’s Napu bridge whose construction started in 1988 was CNY 820million equivalent to $227milion, while the actual cost for the Lekki-Ikoyi link bridge in Lagos for which construction started in 2009 was 29Bilion Naira, equivalent to $183 million.

Project Scope

The comparison of the Kampala-Entebbe Expressway and Nairobi-Thika highway omits the fact that the Nairobi-Thika highway was an existing dual carriageway (4 lanes) that was merely rehabilitated and expanded to accommodate the increased traffic unlike the Kampala-Entebbe Expressway which was largely green-field (80% of the length) with a significant section of the road traversing swamps for which bridges/ viaducts (2.7km in total with 50m deep piles) were constructed compared to Nairobi-Thika highway which didn’t have any such bridges. Similarly, Nigeria’s Lekki-Ikoyi link bridge that is being compared with the Source of the Nile Bridge has only one main long span with one concrete pylon with cable stays compared to the Source of the Nile Bridge that has two long spans with two concrete pylons with cable stays. These project scope disparities have a bearing on the project costs.

Time Value of Money

Some authors have also disregarded the different times the projects under comparison were implemented to appreciate the impact of time value of money on project costs. A fair comparison should therefore take into account the time differences of the prices for the projects.  For instance, the Nairobi-Thika highway which was tendered out at US$ 500 million in 2008, would translate to US$ 786 million in 2012 prices (benchmark for Kampala-Entebbe Expressway prices) based on 12% discount rate. The Shanghai’s Napu bridge cost which was $227million in 1988 would translate to $500milion in present terms. Similarly, Nigeria’s Lekki-Ikoyi link bridge cost of $183million in 2009 would translate to $221million in present terms. Comparison of project costs at very different times would certainly be misleading.

Market Conditions

Furthermore, the comparison of project costs should take appreciation of the market conditions in the respective project country. For instance, evidence from the unit rates from Kenya and Uganda show for example that bituminous products cost twice as much in Uganda as in Kenya. Given that asphalt concrete is a major cost driver on road projects, the major price differences of inputs distort any comparison that can be made.

In conclusion, whereas it may be tempting to conjure up numbers on project costs in other countries for purposes of discrediting projects implemented in Uganda, the public deserve to know the truth about the projects including actual projects costs versus scope and the time when the projects were implemented to appreciate the time value of money. The cost differences between unit cost for some construction inputs in Uganda and other countries such as equipment, bitumen, steel, fuel among others is related to additional costs for importation and/or transportation from the sea port, in-country price of materials (such as rock material which is privately owned), the taxation regime and foreign exchange costs.

Allen C. Kagina is the Executive Director, Uganda National Roads Authority. Twitter @UNRA_ED ‏