KAMPALA- The government has reallocated the $1.9 billion (Shs4.9 trillion) 600MW Ayago Hydropower Project from a Turkish company to China Gezhouba Group.
The deal, which is said not to have gone through competitive bidding, restricted or otherwise, is $210 million more than what Sinohydro Corporation will get for the 600MW Karuma HPP.
The reallocation comes against the backdrop of Japan’s International Cooperation Agency (JICA) pulling out of studies that would have helped establish the feasibility of Ayago HPP.
According to a source, the government’s decision to hand Ayago HPP to China Gezhouba Group was taken after the government’s trump card to get the Japanese to fund the project backfired.
The government had in April upped the ante by ‘awarding’ the Ayago HPP engineering procurement and construction (EPC) contract to Mapa Construction, a Turkish company.
That did not impress the Japanese who had already sunk about $2 million (Shs5.2 billion) in Ayago’s feasibility studies. It is then that the Japanese decided to pull out. The ministry of Energy claimed that the Japanese had pulled out of the study “due to the perceived adverse environmental impacts” that could manifest themselves once the project kicks off.
A document seen by this newspaper indicates that the $1.9 billion project along River Ayago, and straddles the Murchison Falls National Park, would affect the daytime habitat of the hippopotami “permanently”.
It remains unclear how the government plans to reassure other potential investors in the energy sector that what happened to the Japanese and the Turks will not happen to them.
Meanwhile, the government handed China International Water and Electric Corporation (CWE), which the Inspectorate of Government faulted for falsifying its portfolio, the $535 million (Shs1.3 trillion) 188MW Isimba HPP.
CWE had claimed it constructed a 600MW dam so that it could meet the benchmarks for Karuma.
In June, the company asked for “a lead role” in the construction of Karuma, claiming that Sinohydro had copied CWE’s construction blueprint. We could not independently verify CWE’s claim with Sinohydro.
In the same month, CWE petitioned the East African Court of Justice (EACJ) to compel Uganda to follow procurement laws in sourcing for an EPC for Karuma. The court is yet to decide on the issue.