Dfcu bank has been ordered to cough UGX60billion to Uganda National Roads Authority (UNRA) following the termination of a Turkish construction firm, M/s Polat Yol Yapi Sanayi Ve Ticaret which was tasked to construct Muyembe – Nakapiripirit road.
The road starts at Muyembe, approximately 35 kilometres (22 mi) northeast of Mbale, the largest city in Eastern Uganda. The road continues north to end at Nakapiripirit, a total distance of approximately 95 kilometres (59 mi).
For starters, UNRA made a contract with M/s Polat Yol Yapi Sanayi Ve Ticaretin in 2019 to tarmac Muyembe – Nakapiripirit road and this was to be completed within the 36 months but the Authority later realized the Turkish contractor was too slow and as a result, the contract was terminated.
In the contract, UNRA made sure that an advance payment worth 20 per cent of the contract sum was secured by a bank guarantee so that in case of a default, the bank coughs back the money to UNRA. Now, immediately after the construction company failed to deliver, UNRA rushed to Dfcu to get its cash something the bank refused to honor, and the only option now to get this money was through court.
On 19th April 2022 Commercial Court delivered its ruling ordering Dfcu without hesitation to cash out 14,259,362,014 and USD 12,413,382 (approx. 44 billion) under the suit guarantees to UNRA.
The ruling was delivered by Hon Lady Justice Jeanne Rwakakooko who reasoned thus; “The interim orders issued by this Court on 27th January 2022 and extended on 28th February 2022 restraining the 2nd respondent from enforcing, collecting or calling on the advance payment guarantees issued by the applicant to the 2nd respondent are hereby set aside and vacated.”
In her ruling, Rwakakooko added, “The applicant is directed to immediately execute payment of the sums secured under the suit Guarantees, i.e. UGX 14,259,362,014 and USD 12,413,382 to the 2nd respondent as earlier directed and pursuant to the Demand Letter dated 18th January 2022. Eeach party shall bear its own costs.”
