Karuma project contract locks out Ugandan suppliers - official

Workers on site at the Karuma hydro power dam. Local companies have complained about being left out when it comes to supplying materials such as cement and steel products. Photo by Stephen Otage

What you need to know:

Ability. Local firms have been said to lack the capacity to supply.

Kampala. A government official has said Ugandan workers and suppliers have no control over contributing to the ongoing construction works at Karuma power project because the contractor is fully in charge of the contract.
Speaking to this newspaper on Monday, Mr Henry Bidasala Igaga, the commissioner electrical energy at the energy Ministry, said Ugandans should subject themselves to market forces of meeting the quantities, quality and price the contractors are offering for the materials and services they require because this is a “turn-Key contract”.

“The contractor is responsible for the engineering, procurement, construction materials and services. What we want is a final product delivered,” he said on telephone on Monday.
Mr Bidasala’s comments follow complaints from Ugandan manufacturers that their products have failed to make it to the ongoing construction project in Karuma power project. Two weeks ago when this newspaper visited the Karuma power project site, the contractor alleged that they failed to procure cement from Tororo and Hima cement factories because these had failed to meet the quality and quantities of cement required for the project.
When contacted, Ms Cornelia Sabiti, the executive director Public Procurement and Disposal of Public Assets Authority, said under the Oil and Gas Act, the ‘Buy Uganda, Build Uganda’ policy requires that all inputs for such projects should be locally sourced but she is not sure about the energy sector where this is a private contractor.

“I need to bring it to the attention of the Ministry of Energy because this is a private procurement where the provider can argue that the suppliers meet his specifications, which is not the case if it was a public procurement,” she said.
In 2014, government came up with the ‘Buy Uganda Build Uganda’ policy which requires all local projects to purchase inputs and services sourced within the country following an outcry from the members of the Uganda Manufacturers’ Association that their products were not being purchased for such projects.
Likewise, Tororo Cement and Roofings Rolling Mills have complained that their cement and steel products—major inputs for the project— have been rejected by the contractor who has opted to import the products from China and Kenya.

“They need a lot of steel for the project and we have been trying to make a breakthrough for the last one year we were even there during the inauguration and you can imagine how many people we would be employing if they were buying our products,” said Stuart Mwesigwa Roofings Rolling Mills marketing manager.
Mr Alok Kala, the chief marketing officer Tororo Cement Limited, said last year alone, the contractor imported 32,000 metric tonnes of cement from Savannah Cement, a Kenyan company which is said to have Chinese links and they wonder why they took their cement samples to China for testing and have never given them the results.
“They came to us and picked our samples but they have never returned or even made an order for us yet we supply Isimba power dam and we are informed that they are buying from Hima cement but through a proxy,” he said.

The local content policy
Countries engaged in oil and gas production or mining are introducing ‘local content’ requirements. These are mainly in form of policy and regulatory measures that focus on increasing use of the locally available labour, technology and other resources.
The development of local content comes after years of oil and gas or mineral exploitation in many developing countries, where little seems to be transferred to the citizens of these resource-rich countries in form of technology and employment.