Government officials renew fight over Shs8 trillion railway deal

Survey. Standard Gauge Railway engineers study the area in Tororo District last year. FILE PHOTO

What you need to know:

  • One Kenyan official told Daily Monitor, on condition of anonymity, a day before travelling to Beijing that “we are used to your (Ugandan) way of doing things. Ask your officials and see if they will give you a straight forward answer.”
  • The first phase of Kenya’s SGR line running from Mombasa port to the capital Nairobi, that cost $3.8b (Shs13 trillion), was commissioned last year and is operational. Kenya is constructing the 120km line from Nairobi to Naivasha at a cost of $1.7b (Shs6 trillion) to be followed by the 266km line from Naivasha to Kisumu port at a cost of $3.6b (Shs13 trillion) while the 107km line connecting to Malaba will cost $1.7b (Shs6 trillion).

Kampala. That President Museveni reportedly relieved the Standard Gauge Railway (SGR) project coordinator, Mr Kasingye Kyamugambi, of his duties is not entirely surprising to some people in the know, but still, there is “yet an official communication to the effect”.

Mr Kasingye, a civil engineer, previously working with National Planning Authority (NPA) and was tapped by the President to lead implementation of the multi-billion railway project in January 2016.

Sources say Mr Kasingye, then in NPA since 2013, was also part of the eight-member steering committee led by Brig Timothy Mutebile that negotiated the SGR contract whose Engineering, Procurement and Construction (EPC) tender was handed to China Harbour Engineering Corporation (CHEC) after government controversially short-circuited the previous contractor, China Civil Engineering Construction Corporation (CCECC).

The SGR is a classification of modern railway agreed upon under the African Union SGR protocol of upgrading and linking the continent’s railway system to facilitate continental integration. Other countries that have so far upgraded to SGR include Moroco, Ethiopia, Algeria, Egypt, South Africa, and Kenya.
Uganda’s first phase of SGR, the (eastern) line running from Malaba to Kampala, about 273km (or 338km rail length), is expected to cost $2.3b (Shs8 trillion).

The cost has for a while been subject of debate, including a comparative-cost assessment by the parliamentary infrastructure committee which traveled to Ethiopia and issued its report in December 2016.
However, Works minister Monica Azuba in a rejoinder to the committee report submitted to Parliament defended that the $2.3b “is not the construction price”.

Ms Azuba said: “In engineering projects, the planning estimates are refined by feasibility studies, culminating into feasibility estimates.”
She added that feasibility estimates are further refined during design or engineering to arrive at the engineer’s estimates which guide in the bidding but varies from the final contractor’s price. The entire long term SGR network covering the rest of the country is tagged to a cost of $12b (Shs46 trillion).

Stalking controversy
The SGR project has since conception been subject of various controversies but highly placed sources told Daily Monitor the latest episode, including Mr Kasingye’s alleged sacking, is a tip of nasty turf war in the ministry of Works for “control of resources and supremacy”.

The turf war, according to correspondences seen and multiple accounts corroborated by this newspaper, involves blackmail, spying, and stealing documents—with two camps, one which wants CHEC terminated, the entire project concept and team overhauled, and SGR project placed under Uganda Railways Corporation (URC), and another pushing to preserve the status quo.

The fight, according to sources, has pitted Mr Kasingye against former Electoral Commission (EC) chairman Badru Kiggundu, Ms Azuba and officials in URC who feel they should manage the lucrative railway project.

Matters are made worse that the ministry of Works, at the behest of President Museveni, has over the last eight months constituted two separate committees to look into the project costs but returned with contradicting findings.

The latest findings, submitted to the President late last month, by the committee reporting to Mr Kiggundu indicates that the railway EPC tender is inflated by $600m (Shs2.2trillion) based on the conceptual Bills of Quantities.
The committee also recommended several changes in the current SGR plan, including ditching electric train for diesel engine trains to bring down costs.

The committee was led by Ms Rosemary Tibihwa, the commissioner for Transport in ministry of Works, who was presented to the President in one of the meetings as a transport economist.

Mr Kiggundu could not be immediately got for comment on the matter as he was reported away to the United States until early next month. The questions abound credibility of his committee notwithstanding it is also unclear what parameters they benchmarked on.
President Museveni tapped Mr Kiggundu, 73, as his engineering consultant on infrastructure in which capacity he started with probing shoddy construction works on Karuma and Isimba hydropower dams.

Sources say it is on the basis of Mr Kiggundu’s report that Mr Kasingye’s woes intensified.
Mr Kasingye declined to comment on the matter, referring any inquiry by this newspaper to the line minister who is already at loggerheads with him, and the Uganda National Roads Authority (UNRA) executive director Allen Kagina in another simmering turf war. Ms Azuba in a telephone interview downplayed reports of pulling the project to another side, saying “there is no fight whatsoever”.

“SGR is a project under my ministry, so why would I fight it or whoever is in charge of it? Those are rumours,” Ms Azuba said. “It is by far the biggest project this country has ever attempted so we are just re-checking everything during this period to ensure we tread carefully.”
The government signed the SGR contract with CHEC in March 2015, with China’s EXIM Bank guaranteeing financing at 2 per cent interest.
Correspondences seen by this newspaper show that Ms Azuba however, wrote to Attorney General William Byaruhanga on September, 14, 2017, seeking for guidance on termination of CHEC’s contract.

Mr Byaruhanga wrote back on September 27 warning about the decision, and further cautioned that the termination, if at all to be executed, must be grounded on some basis which the minister did not provide in her letter.
Ms Azuba in the interview maintained that CHEC’s contract was not terminated, “but we want to make sure that we are doing everything right. We are doing everything for the good of this country”.

More drama
Also in the mix of the current fight on the SGR, according to sources, are two State House aides and a Turkish engineering construction company Yapi Merkezi Insaat VE Sanayi, which has since last year, been lobbying for business in Uganda and its commission agents.
The Turkish firm was awarded contract to construct an SGR line for Tanzania after its president, John Magufuli, opted out of an earlier arrangement with China, and turned to Turkey to finance and construct the railway line.

The firm first secured tender for the 422km line from Dar-es-Salaam to Morogoro at a cost of $1.215b (approx Shs4.2 trillion) from Turkey’ state-owned Export Credit Bank, as part of the 1,216kms of the SGR Tanzania plans to construct to connect to borders of it landlocked neighbours—Burundi, Uganda, Zambia and Rwanda.

CHEC’s woes started early last year when President Museveni, while on visit to Dar-es-Salaam, was told that Tanzania, which had just awarded its SGR contract, was constructing its line at a comparatively lower cost of $1.5m (Shs5.6b) per kilometre compared to Uganda’s cost $8.4m (approximately Shs30b).

At first, sources said at the time, this was interpreted as President Magufuli’s charm offensive to sway Uganda to gravitate towards the railway Tanzania is undertaking.
Ugandan technocrats flew to Tanzania a week later in panic to ascertain the facts where it was established that Tanzania’s SGR cost per km unit cost is $5m (Shs18b) and not $1.5m.

According to the parliamentary infrastructure committee report, the cost per kilometre of Uganda’s SGR is about Shs30b. On the other hand, Kenya constructed its first Mombasa-Nairobi line at (Shs27b) per km.

In the months following the March 2017 trip to Dar-es-Salaam, President Museveni during Cabinet meetings told officials to “move slow” on the Ugandan project pending further cost analysis and verification of the costs.

Later in November, Ms Azuba at the behest of President Museveni constituted a four-man independent committee led by Prof Edward Rugumayo and comprised of others, Makerere University engineering don Umar Bagambadde, former URC managing director Daudi Murungi and Mr Perez Wamburu, a retired ministry of Works chief civil engineer, to look into CHEC’s EPC contract and also benchmark on Tanzania’s costs.

In their final 81-page report, a copy seen by this newspaper, submitted last December the committee said in the recommendations that: “We note that the total costs given by CHEC are within the cost estimates provided by JB Gaulf for the Kampala-Malaba line.” Gaulf is the firm that undertook the project feasibility study.”
“These costs also include provisions for locomotives, rolling stocks and the Kampala URC station complex and the Tororo railway training school,” the report reads in part.

The committee also deduced that it would be technically erroneous to compare Uganda and Tanzania’s SGR because Uganda’s railway is based on Chinese specifications while the latter is building Arema standards—which is American.
Prof Rugumayo’s team, according to sources also authored a Cabinet memo accompanying the report. The memo was supposed to be tabled when Cabinet resumed in January. However, on two occasions it was expunged from the agenda and when it resurfaced—it had been overly edited.
One of the ministry of Work’s legal officers however in mid-January stumbled upon the original memo and on comparing it with the edited one, immediately raised dust about the ongoing blackmail on the project but was ignored.

Officials could also not respond whether Prof Rugumayo’s findings have been discussed at the highest level. Amidst the wagging of tongues, Mr Museveni on February 15 wrote to Ms Azuba stating that “after enquiring from multiple technical sources”, he had found several “possible weaknesses” in the current SGR plan and concept. “I cannot understand why our civil, mechanical, electrical, and electronic engineers, cannot work together, rely on their basic training, reading widely, research and if necessary, some collaboration, cannot assess the magnitude of the job and make cost estimates themselves,” the President’s letter read in part.
“Involve Dr Kiggundu and give me a response by March 15, 2018,” Mr Museveni directed. This is how the former EC chairman constituted a team whose findings have kicked up a storm.

One the technical people whose opinion the President has enlisted is the embattled former Ethiopian Railways Corporation boss Getachewu Betru, who was reportedly brought on board by Mr Kiggundu as an external consultant, and was invited to a number of meetings to discuss the project.
Ms Azuba also denied any association with either the Turkish company or any of its known commission agents who are said to be behind the ongoing maneuvers to cut lose the Chinese contractor.

Meanwhile, sources say the Chinese are “unhappy” while the Kenyan government is keenly following the events unfolding in Kampala—after what happened on the crude oil export pipeline in 2016.
Uganda and Kenya first mooted the SGR idea in 2008 but formalised the arrangement in 2012. The two governments agreed to construct China Class One standard, whose design classification according to the Chinese standards, is one with annual passengers/freight traffic volume for near-term: which is more than or equal to 20 metric tons.

Between 2012 and 2017, both countries have held 19 meetings under the Norther Corridor Infrastructure Summit to thrash out the project details.
The next meeting is scheduled to take place later this month but in light of the confusion in Kampala the agenda remains murky. The two were compelled by Exim Bank to agree on a “seamless” connecting train from Mombasa to Kampala.
A Kenyan delegation was in the Chinese capital Beijing to further negotiations for a loan for the remaining sections from Naivasha to Malaba but Uganda was not represented yet in February, Kenya wrote to Uganda notifying them of the trip which was to be made in March but was deferred to June.

Ms Azuba said they will start negotiations “after Kenya has reached the final section towards Malaba” while Finance minister Matia Kasaija told this newspaper separately that: “Kenya must commit themselves on bringing the railway to Malaba then we can start.”
One Kenyan official told Daily Monitor, on condition of anonymity, a day before travelling to Beijing that “we are used to your (Ugandan) way of doing things. Ask your officials and see if they will give you a straight forward answer.”

The first phase of Kenya’s SGR line running from Mombasa port to the capital Nairobi, that cost $3.8b (Shs13 trillion), was commissioned last year and is operational. Kenya is constructing the 120km line from Nairobi to Naivasha at a cost of $1.7b (Shs6 trillion) to be followed by the 266km line from Naivasha to Kisumu port at a cost of $3.6b (Shs13 trillion) while the 107km line connecting to Malaba will cost $1.7b (Shs6 trillion).

Cargo movement

Currently, 90 per cent of Ugandan-bound cargo (exports and imports) goes through Mombasa port at the Indian Ocean. It takes a trailer truck an average of five to seven days to move from Mombasa to Kampala, a 20 feet [32-tonne] container costing about $3,000 (Shs12m). The alternative to both the road and SGR is the existing metrE gauge railway which cannot move above 30km per hour, and whose concessionaire—Rift Valley Railways was kicked out early last year rendering the railway operations defective. Government has argued that the new railway is expected to reduce cargo transit times and costs by half.