NWSC Loan Plan Blocked by UGX69.94bn Unpaid Water Bills

The NWSC loan plan blocked by unpaid government water bills totaling UGX69.94 billion has stalled the National Water and Sewerage Corporation’s efforts to raise more than UGX600 billion in commercial financing for water infrastructure development across Uganda.

The financing was intended to support water expansion projects in several towns. Each project required an estimated UGX19 billion to UGX20 billion.

Herbert Ariko, Chairperson of Parliament’s Committee on Environment and Natural Resources, disclosed the development while presenting the committee’s report on the 2026/27 National Budget Framework to the Budget Committee.

“National Water and Sewerage Corporation planned to mobilize UGX600 billion from domestic banks to finance water infrastructure in these towns,” Ariko said. “Each town required between UGX19 billion and UGX20 billion.”

Why the NWSC Loan Plan was blocked

However, Ariko said the NWSC loan plan was blocked after lenders raised concerns about the utility’s creditworthiness.

These concerns stem from unpaid government water bills amounting to UGX69.94 billion. The arrears are owed by 40 Ministries, Departments, and Agencies (MDAs) as of December 2025.

As a result, NWSC’s ability to access credit markets has been constrained.

“The ability of NWSC to mobilize financing has been curtailed due to outstanding government arrears,” Ariko said. “These issues have prevented National Water from securing funding to develop water infrastructure.”

From a financing perspective, the arrears have weakened NWSC’s balance sheet. Consequently, lenders now view the utility as higher risk.

Impact of the NWSC Loan Plan blocked by Arrears

The NWSC loan plan blocked by unpaid bills has broader implications for Uganda’s water infrastructure.

Although Parliament approved UGX81 billion to clear water bill arrears up to June 2025, the funds were not fully remitted to MDAs to settle their obligations to NWSC.

Meanwhile, new arrears accumulated between July and December 2025.

“There has been a fresh accumulation of arrears,” Ariko said. “NWSC could return to UGX80 billion or even higher.”

In addition, delayed payments continue to undermine NWSC’s financial stability. This makes future borrowing even more difficult.

Parliament Raises Accountability Concerns

Remigio Achia, Vice Chairperson of the Budget Committee, called for the issue to be escalated to the Ministry of Finance, Planning and Economic Development.

“This matter should be reported to the Ministry of Finance,” Achia said. “Why give money to vote holders who do not pay utility bills?”

He added that the budget process should prioritize addressing the UGX69.94 billion in unpaid water bills.

Moses Aleper, Vice Chairperson of the Finance Committee, said his committee would engage Treasury Operations to resolve the matter.

“As the Finance Committee, we will take this issue to Treasury Operations and ensure it is addressed,” Aleper said.

Lawmakers Question Remittance Process

Lawmakers also questioned why funds approved to clear arrears are not sent directly to NWSC.

“You approve UGX81 billion, but it is sent to vote holders instead of NWSC,” Achia said. “They then divert the money for other purposes.”

He said Parliament would investigate responsibility for the diversion of funds meant for utility payments.

Broader Implications for Water Infrastructure Financing

The NWSC loan plan blocked by unpaid government water bills highlights deeper financing risks for Uganda’s water sector.

Without stronger enforcement of utility payments and direct remittance mechanisms, public utilities like NWSC will remain exposed to government receivables. As a result, access to commercial financing for critical water infrastructure projects will remain limited.