Railway scandal: How the project slipped off

The controversy surrounding the procurement of the company to construct the monumental Standard Gauge Railway has put Uganda one year behind Kenya

Sunday August 31 2014

Officials and police officers take a rest at one of the railway stops in Kampala

Officials and police officers take a rest at one of the railway stops in Kampala when the government announced plans to start railway transport in the city two years ago. PHOTOs BY Stephen Otage 


The controversy surrounding the procurement of the company to construct the monumental Standard Gauge Railway has put Uganda one year behind Kenya.

And the dispute is not about to end. As State minister for Works John Byabagambi was announcing the termination of the Memorandum of Understanding with China Civil Engineering Construction Corporation (CCECC) and giving a nod to its rival, China Harbour Engineering Corporation (CHEC), CCECC’s was preparing to go to court.

“We have only heard of the developments in the press. We are waiting for the government to come out with a report after the talks with this development and we shall go back to the drawing board,” Kabiito Karamagi, CCECC’s lawyer said on Friday.

This is likely going to draw another long court process that might see the regional conceived project that is supposed to cost at least Shs3.9 trillion, drag on for long.

There are fears that the project will be bogged down by this poor and corrupt procurement process that has previously derailed other crucial infrastructural projects like Karuma Hydro Power project.

Mr Byabagambi says the termination of the MoU came after the heads of state from Kenya, Uganda and Rwanda decided that a new standard gauge railway be built, not rehabilitating and upgrading the already existing lines, which he said was the core of the terminated MoU.

“In January 2012 the GoU entered in MoU with CCECC to rehabilitate the existing line of the railway. It was every clear and I think everyone of sound mind can understand what is meant by rehabilitating an existing line. You cannot rehabilitate what does not exist,” he said.

But on June 20, 2012, Alex Kakooza on behalf of Permanent Secretary Ministry works, Eng. Charles Muganzi, wrote to Secretary to Treasury requesting for certificate of financial implications to build a standard gauge railway. This letter contradicts Byabagambi’s position.
“The estimated cost to design Kampala-Malaba (251Kms) is shs7.8bn which is within the Medium Term Expenditure Framework of shs10.86bn,” letter reads in part.

Another letter written by the Mr Muganzi on April 19 2013 copied to Chief Engineer Uganda Railways Corporation and director of transport ministry of works telling them that CCECC had submitted its feasibility and pre-feasibility study for the Tororo-Gulu-Pakwach to construct a standard gauge railway. These letters contradict, contrary to what Byabagambi.

Mr Omar Yasini, a member of the CCECC negotiation team dismisses Mr Byabagambi: “Right from the time the president invited us, it was building a new standard gauge railway, not rehabilitation. How could we have failed to build a standard gauge railway when we have eight similar projects running in Africa, with the biggest in Nigeria worth $8.2 billion?”

The minister cancelled the MoU despite warnings from the Solicitor General, Attorney General and a High Court ruling delivered by Justice Lydia Mugambe on July 23, 2014 that warned against termination.

The insistence of Mr Byabagambi to have the MoU terminated might also see the company awarded billions of taxpayers money in compensation because it had already spent billions for a feasibility study on the eastern route that has now been awarded to another company.

On May 23, Eng James Byandala, the Minister of Works and Transport, wrote to the Attorney General, Mr Peter Nyombi, asking for advice and the government chief legal advisor advised against termination of the MoU with government.

“The MoU in issue was approved for the signature by this office and this office has previously advised against its termination for reasons, among others, that termination will be too costly to government,” Mr Nyombi responded.

But Mr Byabagambi says the Attorney General has since changed his position. “This time I have not defied the Attorney General. I had to go and sit with him and told him all these facts even those I have not mentioned and he said he did not have these facts.

Otherwise, this would have ended long time ago,” he said, “I have got the clearance from the Solicitor General to terminate the MoU and it was effected on the 22 August. As we talk now, we don’t have any MoU with CCECC,”

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