Disqualified firm lobbies to build Jinja expressway

Kampala. The Chinese firm, China Railway 17th Bureau Group Company (CR17th), which is lobbying to finance and construct the proposed 95km Kampala-Jinja Expressway (KJE), was disqualified in the earlier prequalification stages of the ongoing procurement process, Daily Monitor has learnt.
Documents seen by Daily Monitor and accounts by sources familiar with procurement, say CR17th is the parent company of China Railway Construction Corporation (CCECC) and China Railway Construction Investment Group LTD (CRCIG), which participated in the prequalification stage of the Kampala-Jinja Expressway project but did not go beyond.
CR17th kicked up a storm late last year when it embarked on lobbying Parliament and State House to be awarded the lucrative tender for the Shs3.7 trillion ($1b) road project.
Sources said the lobbying has upset donors—African Development Bank (AfDB) European Union (EU) and the French overseas development agency AfD)—and officials in the ministries of Finance and Works.
The EU, AfDB and ADB committed $400m (Shs1.4 trillion) as “viability gap funding” for the project following earlier discussions with the Ugandan government. The viability gap funding, an economic instrument used in public private partnership (PPP) projects, is a grant to support projects that are economically justified but may not be financially viable.

Review
Sources familiar with the matter intimated that on August 14 last year, a senior State House official asked Works minister Monica Azuba to review CR17th’s expression of interest in the project.
This was before the Uganda National Roads Authority (UNRA) commenced the first pre-qualification stage of the bidding process on September 3.
On August 28, 2018, Ms Azuba recommended that CR17th “be invited” to participate in the procurement, but it did not submit an application for pre-qualification under its name.
However, CCECC and CRCIG submitted their applications. Sources said upon evaluation of the documents, they discovered that CR17th is the parent company of CCECC and CRCIG.
The two companies, CCECC and CRCIG, according to the procurement details, were disqualified on three grounds; failure to show ability to raise third party commercial debt for their five projects amounting to $1b (Shs3.6 trillion) which they submitted, failure to show they had raised third party commercial debt on any project outside China and failure to show that they had a minimum of five projects in which they had been responsible for.
On September 10, Ms Azuba wrote to the chairperson of CR17th Africa business, Mr He Ping, notifying him that procurement for KJE had taken off and had been approved by government as PPP.
Ms Azuba also told the Chinese company’s executives that the project could not be developed under a different model, but welcomed the company to participate in future projects.
In its expression of interest, CR17th offered to finance and construct the Kampala-Jinja Expressway (KJE) in three years “if all other preparation works are done in time.”
UNRA officials say the planning estimate for the KJE is Shs3.7 trillion ($1b) pooled through PPP. The preferred private investor will mobilise $600m (Shs2.2 trillion).
CR17th, however, did not indicate where their funding would come from, but the safest bet according to insiders, was most likely China’s Export-Import (EXIM) Bank which has already funded the 51.4km Kampala-Entebbe Expressway.

Meeting with President
Last month, a delegation led by Mr Ping met President Museveni in Kiruhura District over the KJE project. A State House statement indicated that Mr Museveni directed the concerned government agencies to study the Chinese company’s proposal and come up with a way forward.
Finance minister Matia Kasaija, who was instructed, according to the statement, referred Daily Monitor to Ms Azuba.
When asked at the weekend on CR17th proposal, Ms Azuba said: “You will get to know those conclusions later. For now, we are continuing the project as it was (PPP).” We could not readily reach the three Chinese firms as it was not clear whether they have established offices locally.