Chinese company demands top role in Karuma project

Wednesday July 3 2013

By Nelson Wesonga


China International Water & Electric Corp (CWE), the company that was poised to clinch the Karuma Hydro-Power Dam construction deal only to lose it to Sinohydro Corporation Limited, wants a “lead role” in the project.

Mr Xia Nenghai, an official at CWE’s Uganda office, said the company’s technical design is more sound than Sinohydro’s. “Of…concern to us is that the…direct award bids are based off our…design…our design has been made available to competing companies,” Mr Nenghai in a June 20 letter to Mr Fred Kaliisa-Kabagambe, the Energy ministry Permanent Secretary, states.

“We would be prepared to discuss…with the government under revised terms…provided that CWE or affiliated group companies shall be offered the first right of refusal for the lead contracting role on fair commercial terms…” the letter adds.

Mr Nenghai said the ministry shared the design after it realised that using Sinohydro’s “unexamined design” would have resulted in a huge liability for Uganda. He did not elaborate how.

Mr Nenghai said the company would take legal action to preserve its rights and status unless the Energy ministry implements a court order that quashed the Inspectorate of Government’s cancellation of the procurement for Karuma project.

Following a petition in January by a whistleblower, the Inspector General of Government, Ms Irene Mulyagonja, probed claims that the procurement had been abused. Though the Inspectorate absolved CWE of claims that it might have bribed some members of the evaluation team, the IGG faulted the ministry for not having done due diligence on CWE. The IGG, therefore, recommended that the procurement be started anew.

However, the Kabale Municipality MP Andrew Aja Baryayanga, went to court to challenge the IGG’s power to investigate, let alone recommend the cancellation of a procurement.
Energy minister Irene Muloni later told her Cabinet colleagues that petitions by concerned citizens were delaying the commencement of construct Karuma Dam, and that delays would compromise Uganda medium term power generation.

The government then adopted the IGG’s recommendation, which culminated in the signing of a Memorandum of Understanding between Sinohydro and the government.

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