Energy officials ignore Museveni on Karuma, seek Shs18b for contractor

Kampala- Officials of the Ministry of Energy are on the brink of securing $5.5million (Shs18b) as an extra contract fee for an Indian firm supervising Karuma and Isimba Hydropower projects four months after President Museveni ordered the contract terminated.

Our investigations show that Energy ministry technocrats want the money paid to Energy Infratech Pvt Limited (EIPL), whom the President had noted were “not serious” when he ordered suspension of senior Energy ministry officials following discovery of cracks at the dams under construction.

EIPL chief executive officer Velusamy Vasu and two of the firm’s senior officials declined to comment, and their Kampala colleague Vinit Khosla said: “I don’t comment on those matters, talk to Ministry of Energy for details.”
Mr Museveni had demanded that line minister Irene Muloni consider cancelling the company’s contract for failure to supervise the engineering works.

The Energy ministry in a March 24 letter sought the Solicitor General’s (SG) clearance for an amendment of the contract to provide consultancy services for the construction supervision of the Karuma Hydro Power Plant.

“Due to the large complexity of the parallel works being done at the different phases of the project, it was recommended that EIPL increases its manpower deployment at site to include geologists, quality experts for civil works, electrical and mechanical, health and safety, environment experts, human resource and social issues experts and quantity surveyors to be deployed at the dam complex, power house and tunnel,” suspended Eng Paul Mubiru wrote on behalf of the permanent secretary.

The SG turned down a proposal to increase the contract price by 46 per cent and advised the “procurement entity [to] enter into a new contract. In order to avoid parallel supervision, the contract should provide for linkage between the first and new contract.”

If the Shs18b is processed, it would mean the government is paying to meet the costs of the supervising company’s insufficient manpower who the ministry wants deployed on full time basis as opposed to the original manpower schedule.
The ministry contracted Energy Infratech on October 22, 2013 at $11.2 million (Shs37b) to supervise Karuma Power Project (phase 2).

However, even before the supervisor attends to issues raised by the President and the contract administration powers transfer from the ministry to Uganda Electricity Generation Company Ltd (UECGL), technically putting the firm under the nose of the latter, officials are pushing for an extra fee to be added on their contract.

Ministry of Finance permanent secretary Keith Muhakanizi declined on the planned additional payout.

The Public Procurement and Disposal of Public Assets Authority (PPDA) executive director Cornelia Sabiti in March rejected a request to increase the contract price by 46 per cent.

Insiders have told this newspaper that some Energy and Energy Infratech officials are creating a non-existent emergency to spirit out cash from the national coffers.
Both minister Muloni and PS Kaliisa Kabagambe didn’t respond to our inquiries.

Same problems, old complaints
As the ministry lobbies for more funding for the firm, the same trail of complaints raised when the projects came under the spotlight continue to prevail. For instance on June 2, UEGCL chairman Dr Stephen Isabalija wrote to the CEO Energy Infratech, telling him that: “There is no doubt that the engineer has failed in its task to manage and adequately supervise the project. Clause 3 of the Presidential directive issued on April 5, required removal of the top management of EIPL at both projects and deployment of very well experienced and committed professionals to properly supervise the projects. These replacements are long overdue.”

Energy Infratech, however, faults the Chinese contractors for ignoring the red flags it persistently raised.
On June 27, Mr Dhruva Chakravorty the company’s project manager for Isimba wrote to Mr Liu Renwel, the deputy general manager China International Water and Electric Corporation (the firm constructing the dam), stopping the construction of the embankment dam until the approved designs and drawings were implemented.

The firm, however, went ahead to construct the dam until last Friday when a joint-team visit stopped them.

UEGCL and Energy officials have expressed fear that the ongoing wrangles mean work at the dams, billed to bring an additional 783 megawatts on the national grid, will take longer and likely face quality issues.
UEGCL CEO Harrison Mutikanga last month asked PS Kabagambe, whose ministry has contractual authority over the contractor and owner’s engineer, to intervene and ensure that “the contractor immediately stops carrying out concrete repair works without an approved concrete defects repair plan ...”
This resulted in a June 24 site meeting during which the Chinese were compelled to oblige.

About the projects

Projected to produce 600MW, Karuma dam was awarded to Chinese firm Sinohydro in June 2013, starting construction in December the same year. It is expected to be commissioned in December 2018. China committed to finance 85 per cent of the dam’s $1.6b (Shs5.6 trillion).

Uganda borrowed Shs1.435b (Shs4.8 trillion) from China’s Exim Bank and obtained the balance from the country’s Energy Fund.

This newspaper reported yesterday that only 30 per cent of the work had been accomplished two years into the project and the balance would be completed by December 2018. Sinohydro has completed excavation of the dam and intake channels.

Isimba Hydroelectric Power Station is a 183 megawatts hydroelectric power project worth US $570million (Shs1.4trillion) under construction by China International Water & Electric Corporation. The project is financed by a loan from China’s Export-Import Bank after Parliament gave government a nod to borrow $482.5 million (about Shs1.4 trillion) from China Exim Bank at two per cent annual interest repayable over 20 years. Uganda will contribute the remaining $107 million.

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