August 18, 2013

KARUMA: DAM ‘COMMISSIONED WITHOUT CONTRACT’

Sinohydro Corporation limited, a Chinese state firm is yet to sign the contract for the construction of Karuma Hydro Power Plant, despite holding a ground breaking ceremony early this week.

On Monday last week, President Yoweri Museveni launched the construction of the 600 MW power dam. However, the contract negotiations were finalized on August 15 after the contract’s committee tasked the contractor to explain how it got the contract.

President Yoweri Museveni unveils the plaque to mark the ground breaking ceremony of the 600 MW hydropower project on August 12. PPU PHOTO
President Yoweri Museveni unveils the plaque to mark the ground breaking ceremony of the 600 MW hydropower project on August 12. PPU PHOTO

It came after reports emerged that Sinohydro Corporation limited was dubiously awarded the contract through a Public Private Public Partnership directly by President Yoweri Museveni after a bilateral agreement between Uganda and the Chinese government, which will finance 85 percent of the project.

According to the company’s implementation schedule, the contract was supposed to be signed on August 02. A member of the contracts committee, who did not want to be named because of the sensitivity of the matter, says they hesitated to sign the contract because the proper procedure was not followed.

He says despite the fact that the contractor claim that it was a directive from the president, there was no evidence to ascertain the claims because the memorandum of understanding the company tabled before the committee was signed by Irene Muloni, the Minister of Energy.

However, Kabagambe Kaliisa, the energy ministry permanent secretary Kabagambe Kaliisa told local media that the contract had long been signed saying that what the contracts committee was still discussing with the contractor was the Engineering, procurement, construction and financing.

Kaliisa explained that the contractor is supposed to provide bridge financing as the government financing negotiations are being concluded.

He added that the rumor that construction began before the signing of the contract was finalized is misconceived.

Sinohydro Corporation Limited is one of the companies that participated in the initial biddings, which was won by China Water Electronic Corporation-CWE. The contracts committee had in their evaluation report said that Sinohydro submitted insufficient information about its ownership and that there were discrepancies in its work plan.

The company was awarded the contract after the IGG canceled the bidding process on allegations that CWE was suspiciously awarded the contract after a couple of whistle-blowers went to court challenging the process.

The 600MW dam which was initially supposed to be financed by the government of Uganda using the energy fund will now be co-financed by the government of China. China will finance 85 percent of the project through a soft loan from China Exim Bank.

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