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Karuma dam funding hangs in balance

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By Isaac Imaka

Posted  Tuesday, June 17  2014 at  01:00

In Summary

Reason. Government is demanding evidence from the contractor for an advance payment for the project before it commits its 15 per cent contribution.

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KAMPALA- Funding for the construction of the 600-megawatts Karuma Hydro Power Dam could have hit a snag, officials from ministries of Finance and Energy have said.

For government to meet its contribution for the dam’s construction on River Nile, the contractor, Sinohydro, has to prove that it has secured its part of the bargain, Finance spokesperson Jim Mugunga and the director of Energy and Mineral Development, Mr Paul Mubiru, separately told the Daily Monitor in a telephone interview yesterday.
The conditions to be met, according to the government officials, are that Sinohydro must show evidence of an advance payment guarantee from Exim Bank that it will give the Chinese company money for the project.

“Each of the boxes, in as far as funding, must be ticked. If at anyone time the boxes are not ticked, then one of the partners can withhold,” Mr Mugunga said.
He said the government is a committed partner in the project and its shareholding will be met, adding that it had created the energy fund.

“The government has clearly indicated that energy is a priority area, which will drive modernisation and infrastructure. The implication is that just as was the case with Bujagali, Karuma will be funded,” he said.

When Sinohydro was awarded the contract, it was agreed that government contribute 15 per cent and the contractor raise the rest.

But in a May 12 letter to the accounting office of the Energy ministry, the company chief representative in Uganda, Mr Deng Xiaoquan, says the firm is yet to secure funds from Exim and now wants government to first release its share.
The letter gives government up to June 30 to provide an advance of $253 million (Shs650b)—15 per cent of the total contract value.

Mr Mugunga does not see the deadline as an ultimatum because “partners do not give one another ultimatums”.

iimaka@ug.nationmedia.com