Uganda warned over termination of Entebbe Expressway contract

KAMPALA. The Attorney General has warned the government against abruptly terminating the contract of the private operator of the Kampala-Entebbe Expressway, saying such a move could expose Uganda to costly international arbitration.

The warning was contained in a response presented to Parliament by Deputy Attorney General Jackson Karugaba Kafuuzi on Thursday as legislators prepared to consider 14 recommendations arising from an inquiry into the management, operation and toll collection system of the 25-kilometre expressway.

Parliament’s Committee on Physical Infrastructure, chaired by Mr Mwine Mpaka, has recommended the immediate termination of the private operating arrangement and the transfer of the expressway to the Ministry of Works and Transport.

The committee has also proposed that the Uganda Revenue Authority (URA) take over toll collection, arguing that direct government management would reduce the cost of private contractual arrangements and leave more resources available to service the debt incurred to finance the road.

However, the Attorney General’s response says government cannot terminate a valid contract without first establishing that the operator has committed persistent breaches and following the termination procedures provided for in the agreement.

Mr Kafuuzi told Parliament that where a breach occurs, the contractor must first be formally notified and given 14 days to remedy it.

The contract also provides for liquidated damages and reductions in payments where improvement works are delayed. Termination on grounds of persistent failure can only arise after specified contractual thresholds have been reached.

The Attorney General has consequently advised the Ministry of Works and Transport to undertake a comprehensive assessment to establish whether the operator’s failures have reached the threshold required for termination.

EGIS contract

The dispute centres on the performance of French company EGIS Road Operation S.A., which was contracted by the Uganda National Roads Authority (UNRA) on April 13, 2021, to operate and maintain the expressway.

The five-year contract, valued at Shs122.86 billion, took effect on May 24, 2021, with provision for an extension of up to 24 months subject to satisfactory performance.

EGIS’s responsibilities go beyond toll collection. They include road safety improvements, lighting, tolling infrastructure, installation of an Independent Traffic Monitoring System, an Automatic Vehicle Classifier and systems for controlling overloaded vehicles.

Parliament’s committee found that several of these obligations had not been fully implemented.

Among the shortcomings cited were incomplete installation of the Independent Traffic Monitoring System and Automatic Vehicle Classifier, inadequate carriageway lighting and road-reserve fencing, and weaknesses in high-speed Weigh-In-Motion systems.

The committee said the failures justified returning the expressway to direct government management.

The Attorney General, while acknowledging that failure to complete works within agreed timelines amounts to a contractual breach, cautioned that a breach does not automatically entitle government to terminate the agreement.

Pinnacle contract

The legal response also disputes Parliament’s concerns over the extension of a related contract involving Pinnacle Security Limited.

The committee had recommended an investigation into the former Permanent Secretary over what it described as an illegal Shs36.3 billion extension allegedly granted without the Attorney General’s approval.

The Attorney General’s office disputes the finding, saying the Ministry extended the contract through a letter dated May 20, 2026, covering the period from May 24, 2026 to May 24, 2027.

According to the legal opinion, the extension was provided for under Clause PCC 39.1 of the original agreement and did not create additional expenditure.

The Shs36.3 billion cited by the committee, the office said, was part of the original contract price, making the extension a “no-cost extension” that did not require fresh legal clearance.

The office also rejected claims that the novation agreement transferring the contract to Pinnacle had not received legal approval, saying the Solicitor General cleared it on April 22, 2026.

Mr Kafuuzi said satisfactory performance remained a condition for the extension, with the Ministry responsible for assessing the contractor’s performance against the agreed key performance indicators.

URA toll collection

Parliament’s proposal to hand toll collection to URA also faces a legal hurdle.

The Attorney General says the Roads Act places responsibility for toll collection on the relevant roads authority, in this case the Ministry of Works and Transport.

The function, therefore, cannot simply be transferred in its entirety to URA without amendments to the law, although the two institutions can collaborate in administering the tolling system.

Similarly, the Ministry cannot immediately take over operations while the existing EGIS contract remains legally enforceable.

Instead, the Attorney General supports a forensic audit of the EGIS and Pinnacle revenue collection systems from their inception.

The audit is intended to establish whether government has lost revenue that should have been used to service the loan that financed the expressway.

Audit raises concerns

The legal response points to an information-systems audit finalised on August 19, which identified several weaknesses in the expressway’s operations.

The audit cited high operating costs, weak governance systems, network security vulnerabilities, incomplete overload-control systems, limited payment options, manual vehicle classification, unsupported toll exemptions and prolonged lane closures.

The Attorney General also addressed concerns over free toll passes issued at Busega Toll Plaza.

Parliament’s inquiry found that free passes worth Shs314.355 million were issued between January 2022 and June 2026.

The Attorney General said recovering the money from the contractor may not be straightforward because, although the Roads Act specifies categories of vehicles and persons exempt from toll payments, the contract also provides free passes for certain Ministry and operator staff.

The legal opinion said the irregularity was attributable to government and could therefore not automatically be recovered from the private operator.

The Ministry and Attorney General’s office have proposed regularising the exemptions through appropriate statutory instruments.

Criminal investigations

The Attorney General also urged caution over calls for criminal investigations and prosecution of officials involved in the procurement, management and oversight of the expressway.

The office said determining whether offences were committed should be left to the relevant authorities, noting that Article 120 of the Constitution gives the Director of Public Prosecutions authority over criminal investigations and prosecutions.

It also noted that previous Auditor General reports had not identified irregularities in the procurement of EGIS.

The proposed forensic audit, the office said, should first establish whether financial losses occurred and quantify them before responsibility is assigned.

The dispute has brought into sharp focus the challenges of managing major infrastructure projects financed through sovereign borrowing but operated by private companies.

For Parliament, the central concerns are accountability, protection of toll revenue and whether government is getting value from the operating arrangement.

For the Attorney General, however, those objectives must be pursued within the confines of contractual and statutory obligations to avoid exposing Uganda to potentially greater financial liabilities.