Railway scandal: Gen Otafiire warns on delays

Monday August 4 2014



KAMPALA- The controversy over the allocation of a tender to construct the standard gauge railway has drawn in President Museveni with Justice and Constitutional Affairs minister Kahinda Otafiire asking the Head of State to intervene and defuse the row that has delayed the regionally conceived project.

Sunday Monitor reported yesterday how the government was in a fix over the cancellation of the contract awarded to China Civil Engineering and Construction Corporation (CCECC). State minister for Works John Byabagambi, on June 8, wrote terminating a memorandum of understanding (MoU) between government and CCECC, signed in 2012. The Mou enjoined the Chinese firm to upgrade the railway’s eastern route.

Gen Otafiire has warned the MoU should not have been terminated. The Justice minister, in a missive to the President, also says the rival company, Chinese Harbour Engineering Corporation (CHEC), which Eng Byabagambi has chosen, has no essential experience in railway construction.

“...the railway network is certainly a monumental infrastructure project that must be constructed to its perfection since it is to last more than 100 years. Thus to take a chance on a company that is not qualified may be transferring legalities to the next generation to come,” Gen Otafiire warns.

Gen Otafiire calls for further assessment of the process and wants the verification team to “exercise professionalism”. “(There should be) verification and analysis of the due diligence reports on CCECC and CHEC separately to determine capability and capacity of each company,” he said.
He said this is “a sensitive and grandiose” project that should be handled carefully and disagrees with the situation of a single minister making decisions alone.

The Minister for Presidency, Mr Frank Tumwebaze, said the President Museveni’s interest in the matter is to have the project concluded on time. “...I think the President even considered having UPDF involved to see that it’s done on time,” Mr Tumwebaze said.


Similarly, the Presidential Press Secretary, Mr Tamale Mirundi, said he had not seen the letter from Maj Gen Otafiire to the President.

In a March 20 letter, Mr Byabagambi wrote: “The changes have been facilitated by the decision of the Heads of State of East Africa, which resolved to build the standard railway gauge as opposed to rehabilitate the existing railway structure.”

Yesterday, Mr Byabagambi told Daily Monitor that he only involved CCEC in preliminary stages. “ I don’t have a contract with anybody. I only signed a loose MoU, therefore; we have not cancelled any contract,” he said. He, however, added: “I am going to negotiate with them next week.”

Asked why he ignored the Attorney General’s advice, he said: “ His was an opinion, unfortunately he gave an opinion on a wrong contract.”

Senior government officials Daily Monitor spoke to declined to speak for attribution saying the matter was “delicate.” Documents show that CCECC quoted $1.250b billion as the cost of the project but the government was giving it to another company at $1.7b.
CCECC is contesting Mr Byabagambi’s decision to give them the western route on grounds that the priority of the government was the eastern route.

To them, awarding them the western route would mean giving them a job which would take long to start.

CCECC says it has spent more than Shs7b on the feasibility study of the Malaba-Kampala and Tororo-Pakwach-Gulu-Nimule railway route but wonders why Eng Byabagambi wants it awarded the Kampala-Bihanga-Mirama Hills, the route that connects to Rwanda.

The High Court has also ruled that the termination of government MoU with CCECC was “irrational, ultra-vires and not in public interest”.

According to a tripartite agreement between Uganda, Kenya and Rwanda, the Railway from Mombasa to Katuna-via Kasese should be upgraded quickly to standard gauge but the controversies on the Ugandan side might delay the project.

In a memo dated May 13, 2013, the former ministry of Works permanent secretary, Eng Charles Muganzi warned that government risked financial loss. “This multiplicity of parallel MoUs and commitments between Government of Uganda and companies is beginning to cause embarrassment to the government and will most likely result in government paying compensation costs,” he warned.

In other correspondences between the ministry of Works copied to other government agencies, Ethics minister Simon Lokodo wrote on July 9, telling Eng Byabagambi to halt the allocation of the eastern railway line to CHEC before the Inspector General of Government completes investigations on the complaint filed by CCECC.

Mr James Byandala, the minister for Works and Transport, in May 23 wrote to the Attorney General, Mr Peter Nyombi, asking for advise and the government chief legal adviser, advised against termination of the MoU.

“The MoU in issue was approved for the signature by this office and this office has previously advised against its termination for reasons, among others, that termination will be too costly to government,” Mr Nyombi responded.

Even as Mr Nyombi advised against termination of CCEC agreement, Mr Byagambi had on September 12, 2013 appointed a team including Ministry of Defence officials, to the steering committee for the development of the Uganda standard gauge railway network.

The team visited China from November 14 to23 , 2013 on invitation of M/S China Habour Engineering Company, according to their report after the visit.


October 29, 2010: President Museveni invites CCECC to work on the railway with the UPDF.
January 2012: CCECC visits Ministry of Works and Transport and a Memorandum of Understanding is signed.
January 10, 2012: Ministry of Works acknowledges approval from the President
April 26, 2012: CCECC technical team allowed to carry out a feasibility study
April 13, 2013: CCECC submits a feasibility study
April 18, 2013: UPDF and CHEC sign an MoU
August, 20, 2013: CCECC meets ministry of Works officials and it is agreed that the railway sections CCECC has done feasibility study should be allocated to it.
August 30, 2013: Feasibility studies with amendment by CCECC are submitted to the ministry
November 26: Museveni meets CCECC representatives in Rwakitura
December 17-20, 2013: Due diligence team travel to China
February 3, 2014: CCECC writes to follow up feedback of the due diligence.
February 5, 2014: Ministry of Works seek advice from Attorney General to terminate the MoU
February 19, 2014: President Museveni writes to ministry of Works to confirm CHEC and CCECC to build the railway.
February 26, 2014: Attorney General writes advising against termination of the MoU
March 18, 2014: Meeting is held between UPDF, CHEC, CCECC and State House and it is communicated to CCECC that some sections of railway section earlier allocated to CCECC would be given to CHEC
March 20, 2014: CCECC receives official communication from the ministry of intent to terminate CCECC MoU.
April 8, 2014: CCECC receives official notice of termination of the MoU