Fresh fight erupts over Uganda telecom contract
People walk past Uganda Telecom offices in Kampala. Officials said the disagreements within Uganda Telecom threaten to scuttle the $225m (Shs855b) capital injection in the company. PHOTO/FILE
What you need to know:
- Executives of the foreign firm owning majority stake in the revived Uganda Telecommunications Corporation Ltd, are expected in the country this week to resolve the delay in handing over to them the management of the national optic fibre network.
Top executives of the Dubai-based ROWARD Capital Commercial Broker LLC, the new shareholders in the revived Uganda Telecom, are due to fly in this week for high-stakes discussions amid infighting among bureaucrats.
Officials said the disagreements, evidenced in trails of official correspondences and minutes of meetings this newspaper has seen, threaten to scuttle the $225m (Shs855b) capital injection in the company.
The contention is over a proposal for the transfer of management of the National Data Transmission Backbone Infrastructure and e-Governance Infrastructure (NBI/EDI) from the National Information Technology Authority-Uganda (NITA-U) to Uganda Telecom, now trading as Uganda Telecommunications Corporation Limited (UTCL).
The National Data Centre sits at the Statistics House on Colville Street in Kampala while NBI is a countrywide network of cable built with loan from China to enable government agencies interface electronically, saving costs and time.
Our investigations show that the infighting has sucked in senior officials and brokers with political connections, pitting NITA-U leadership against their supervisors in the parent Information, Communication and Technology (ICT) ministry.
Other offices drawn into the matters include the Attorney General’s office and ROWARD, the already signed-up foreign investor in UTCL. The investor is represented by its lawyer, ABMAK Associates.
On another front, NITA-U, the statutory body mandated to coordinate government IT-services, is in dispute with Soliton Telmec Uganda Ltd, the Kenyan company first contracted in 2018 to commercialise and manage NBI on a revenue-sharing arrangement.
Soliton claims they are merely contractors and NITA-U is exploiting the stalemate to their advantage. The company, speaking through an emissary who asked not to be named, refuted claims that it planned to shut down government Internet connectivity with the looming termination of their NBI contract and unpaid bills by NITA-U.
NITA-U and ICT ministry, both of which we contacted for this article, declined to speak on the disagreements that have seized the attention of President Museveni, who briefed Cabinet and disclosed that he was investigating claims some Ugandans sneaked to extort bribes from investors in Dubai in exchange for stakes in a telecom.
According to our investigations, NITA-U has over the last four months defied repeated directives by the Presidency, Ministry of ICT, and the Attorney General to surrender key information relating to operations of the NBI which it claimed is in the hands of Soliton.
President Museveni himself, multiple sources intimated, has told Cabinet more than once that some technocrats he did not name were frustrating the ROWARD-UTCL marriage.
On December 22, 2023, ROWARD and UTCL signed a joint venture agreement including a share subscription and allotment agreement at State House, Entebbe, transferring 60 percent shareholding in UTCL to the former.
Mr Chaher AL Taki signed on behalf of ROWARD while ICT minister, Dr Chris Baryomunsi and Henry Musasizi, the junior finance minister, signed on behalf of UTCL.
State Minister for Finance Henry Musasizi (R) and Permanent Secretary and Secretary to the Treasury in the Ministry of Finance, Mr Ramathan Ggoobi (C), appear before the budget committee at Parliament recently. PHOTO | DAVID LUBOWA
The transfer of the NBI to UTCL was among the key terms the government committed to in the December 22 agreement.
Others included the issuance of a national telecommunications operator licence, negotiation of shareholders and support agreements, and timely modification of the company’s registration at the Uganda Registration Services Bureau (URSB).
These were supposed to be completed within three months, ending March 22, 2024, to facilitate operationalisation of the ROWARD-UTCL joint venture.
In turn, ROWARD would invest $25m (Shs95b) within 90 days from signing the deal, and invest an additional $200m (Shs756b) over the next three years.
The government has so far seen through the new company registration. Documents lodged at URSB on March 24, 2024, show that ROWARD owns 60 percent of UTCL, and the government 40 percent. The Ministries of ICT and Finance are co-shareholders on behalf of the Uganda government.
Enter dark arts
Uganda Telecom (UTL), the predecessor outfit of UTCL, was one of the four successor companies of the defunct Uganda Posts and Telecommunications Corporation (UPTC).
It was co-owned by the governments of Libya and Uganda, but liquidated in 2017 and placed under receivership of URSB after years of alleged mismanagement that left the firm sitting on Shs700b debt.
Subsequently, Ms Evelyn Anite, the State minister for Investment and Privatisation, led efforts to revive the company now trading as UTCL. It was re-incorporated in April 2021 with 60:40 co-shareholding by the ministries of ICT and Finance.
State Minister for Privatization and Investments, Ms Evelyn Anite. PHOTO | BUSEIN SAMILU
The journey to revive the government telecom led to public clashes between Ms Anite on the one hand and then Deputy Attorney General and URSB on the other. Then came the fallout as senior government officials went window shopping for prospective investors to inject money in the company.
In the current row, President Museveni has in back-to-back directives ordered that the management of NBI and e-Government network, which was conceived to link all government operations on a single fibre cable, be handed over to UTCL as one of its key businesses.
This newspaper reported in early May 2018 that in one Cabinet meeting, the President tasked ICT ministry officials to explain circumstances under which NITA-U procured Soliton to manage NBI.
“Who gave my NBI to Soliton? How come this was not brought to Cabinet for approval,” the President reportedly asked.
It is on this basis that he directed that NITA-U be folded back as a department under the parent ICT ministry.
Six years later, on February 24, Parliament rejected the Executive’s proposal, allegedly with influence of some power brokers.
We emailed NITA-U’s Communication Manager, Ms Florence Mukankusi, on April 9 for the the Authority’s side of the story.
Ms Mukankusi indicated that she had forwarded our inquiries to her executive director, but returned after three days to say they were unavailable to comment.
On the day of signing the UTCL-ROWARD joint venture in December 2023, President Museveni wrote to ICT minister Baryomunsi, directing him “to accept that ROWARD acquires 60 percent shares straight away”.
“They should also be given the management of the ICT backbone (NBI) which, I hear, had been given to another private operator without my knowledge. Who made that decision? What advantage did Uganda get in all that?” he asked.
The UTCL-ROWARD joint venture, Mr Museveni opined, “will create jobs, pay workers, pay for utilities, and pay taxes like the private telephone companies are doing; but, in addition, it will also generate dividends for the country”.
“The demand for them to put money on the account before signing is wrong. Sign and, then, have a time table for depositing the money and investing in the company. If they default on that, then they will be wrong,” the President wrote, copying in Attorney General Kiryowa Kiwanuka, Finance minister Matia Kasaija and her junior Anite.
Minister Anite told this newspaper that her role in the matter stopped at establishing the company.
“I have seen some people drag my name in the mud … but let it be known that my full involvement stopped after the new company was launched and started a new chapter,” Ms Anite said, adding, “The new chapter has been steered by the Ministry of ICT and the Attorney General and, of course, the President who wants to see a new telecom set up to compete with the others.”
Four months since the signing of the joint venture deal in December, senior government technocrats have been wrangling over transfer of the NBI to UTCL which would allow ROWARD to develop a business plan as well as guide negotiation of the Shareholders and Support agreements, respectively. The Support agreement would, among others, specify the NBI capacity requirements, management, and terms of commercialisation.
In this case, industry sources told this newspaper that with the ongoing cut-throat competition among the existing mobile network operators for provision and extension of broadband services, NBI would be the low hanging fruit for UTCL.
Machinations
In 2006 the government acquired a $106m from China’s Export-Import (EXIM) Bank to the optical fibre cable to link all government offices and the supply and installation of communication equipment to enable the transmission of voice, data and conferencing services.
The project was to be completed in four phases over a period of 27 months and the loan was to cover only three of these phases. The project commenced on October 11, 2006 and was scheduled for completion in 2010, but underwent several delays and setbacks.
A 2013 audit by the Auditor General revealed that conceptualisation of the project was not properly undertaken amid several technical faults, leading to poor connectivity. As a result, many government ministries, departments, and agencies (MDAs) spent billions on procuring Internet services.
Multiple sources and our analysis over the past two months of a trove of official documents, offer a snapshot of discord among top bureaucrats.
In a Cabinet meeting last month, President Museveni revealed that “certain individuals” from Uganda had flown to Dubai in the United Arab Emirates to negotiate for themselves a 10 percent commission from ROWARD investors.
He inquired if the line ministers were aware, prompting the minister to investigate and report at the next Cabinet sitting.
Sources close to the investigations identified the individuals as private sector actors, not Uganda government officials.
It is unclear if the suspects are still a subject of interest. However, even before the graft claims came to light recently, some senior officials and power brokers had been hard at work.
When President Museveni visited Vietnam in November 2022 to strengthen bilateral relations with the Southeast Asian country through investments, one of the companies courted was Viettel Group, the state-owned telecoms company.
President Museveni (C) pays homage to Vietnamese revolutionary leader Ho Chi Minh at the Mausoleum in Hanoi on November 24, 2022 during a three-day visit to Vietnam. PHOTO/HANDOUT
A senior minister (whose name we are withholding for legal reasons), reportedly working in concert with a power broker-turned-politician connected in both Uganda and Vietnam, put a spanner in the works to sway Viettel into a joint venture with UTCL.
Their scheme, according to knowledgeable sources, lost steam in early 2023 following change of government in Vietnam.
Unbeknownst to most officials, sources revealed, President Museveni had been courting investors from UAE during his trips to the country; he visited Dubai in October 2021 and in January 2023, and Abu Dhabi in November 2023.
It is unclear when the President first courted ROWARD. However, there are reports of the Financial Intelligence Authority (FIA) conducting due diligence on the company.
The report submitted to the Ministry of Finance in mid-2022 contained some unpleasant findings and questions about the firm’s capacity to bankroll UTCL revival.
It later emerged that some senior officials and interlocutors peddling interests of rival potential investors influenced the report, prompting insiders to alert State House.
ROWARD paid courtesy call on the President at State House, Entebbe, on October 16, 2023 during which its executives expressed interest to invest in a wide range of sectors, the Presidential Press Unit (PPU) noted in a statement.
During the President’s visit to Abu Dhabi weeks later, in November, diplomatic sources revealed that ROWARD officials raised concern that there had been no follow-up on their earlier discussions.
Highly placed officials said the President subsequently directed the Attorney General to fast-track the deal, leading to the December 22 signing.
Defiance?
On February 1, 2024, the Ministry of ICT Permanent Secretary, Dr Aminah Zawedde, wrote to the NITA-U executive director, Dr Hatwib Mugasa, referencing earlier reminders, “to urgently submit a report containing copies of all 21 running contracts related to NBI, technical requirements of the running of NBI, a NBI network inventory, and roadmap for successful transfer of NBI from NITA-U to UTCL”.
Dr Mugasa responded five days later, noting that NITA-U had engaged Soliton Telmec Ltd to avail the reports for onward submission.
“Consequent to the above, we request for 10 working days to enable us to prepare and submit to you a comprehensive response,” Dr Mugasa wrote.
NITA-U hired Soliton to manage the NBI at a cost of $8.2m annually in respect of transport charges and revenue sharing agreement. The onboarding of ROWARD would suggest Soliton’s contract which is valid until 2028 will have to be terminated or revised, according to bureaucrats, presenting potential legal challenges.
Soliton declined to comment on the matter when contacted. However, individuals who identified as representing interests of the company said Soliton officials had unresolved concerns with NITA-U, including unpaid bills.
The intermediary said Soliton learnt only recently during engagements with senior Finance ministry officials that this unpaid money was provisioned in the budget, but reallocated through virement — an authorised reassignment of a vote to another budget item.
Dr Aminah Zawedde, the Permanent Secretary of Ministry of ICT. Photo/Courtesy
Our investigations show that PS Zawedde again wrote to NITA-U on February 8, directing it to submit all the required information by close of business the next day. The request went unheeded.
On February 23, Dr Zawedde again wrote to NITA-U informing them of a proposed visit by ROWARD engineers in three days to the Data Centre at Statistics House in Kampala.
NITA-U responded on the day of the proposed visit, noting that Clause 5 of the agreement signed on December 22 requires UTCL to expeditiously take all steps necessary under the laws of Uganda.
These included taking the necessary steps to exit any existing agreements and to ensure that the maintenance and commercialisation of the NBI is transferred to UTCL.
“It is, therefore, our opinion that the National Data Centre, which is managed using internal resources, is not part of the NBI, and as such is not part of the said agreement,” Dr Mugasa noted in his February 26 response.
He added: “In line with the above [and] keeping with the physical security requirements of the National Data Centre, the visit by a team from ROWARD is not justified.”
In light of the rejoinder, PS Zawedde wrote to NITA-U again on February 28, clarifying that the National Data Centre is part of the NBI assets.
“I would also like to remind you that the Presidential Directive on March 29, 2021 directed that all government infrastructure should be consolidated under UTCL,” she noted, “You have been part of meetings and negotiations where this directive was discussed and are, therefore, fully aware of the steps the government is taking to implement this directive.”
President Museveni, knowledgeable sources intimated, got information that ROWARD engineers were being blocked from accessing the National Data Centre and in one of the Cabinet meeting, rejected claims of national security concerns raised.
When contacted for this story, Dr Zawedde referred this newspaper to ICT Minister Baryomunsi.
We reached out to the minister on Wednesday, last week, and he said he was low on mobile phone handset battery and did not call back as promised.
Our subsequent telephone calls to him until Friday evening went answered.
ROWARD’s lawyers, ABMAK Associates, wrote to minister Baryomunsi on March 4, protesting denial of access to the data centre to their client on security grounds.
“This is astonishing given that this same data centre was part of the facilities managed by Soliton Telmec Ltd under the contract signed on September 2, 2019 with NITA-U. In fact, at one point, Soliton outsourced the management of this data centre to Sbyl, a third party,” the law firm wrote.
Locking horns
ABMAK underlined the need by NITA-U to handover all information requested through the several correspondences by Dr Zawedde and tender, among others, documents by which NITA-U procured Soliton and Soliton’s bid.
They also want the negotiation minutes, site coverage for 2G/3G/4G and 5G together with the corresponding locations, site portfolio for the respective infrastructure service providers, and fibre coverage for the respective operators in the country.
Following the February 26 incident and ABMAK’s March 4 letter, minister Baryomunsi convened a meeting between ABMAK and attended by officials from his ministry, NITA-U and Attorney General to defuse the impasse.
The meeting recapped previous communications and also set timelines for the agreed deliverables.
Later on March 20, ABMAK emailed NITA-U, requesting for seven documents; audited financial and balance sheet for the NBI, all supplier contracts and their accountings, and a list of accounts receivable from all the NBI customers — private and MDAs —as at March 2024.
They also demanded for information on all contracts of NBI customers, all capacity and upstream contracts for all providers, both local and international.
The legal representatives of ROWARD in a March 26 protest to the Attorney General noted that since the meeting “there has been little cooperation from NITA-U”.
“Almost information delivered by NITA-U in response is, to say the least, unreliable and unintelligible. It cannot be relied upon to prepare a business plan,” they wrote.
The Authority did not respond to our inquiries.
A day after ABMAK’s protest, Deputy Solicitor General Pius Biribonwoha, who is the second top technocrat in the Attorney General’s Chambers, notified NITA-U executive director that he had been directed by the Attorney General to:
“… require you to immediately, and without fail, furnish ROWARD with all the information sought to enable them to prepare a business plan as required by the Share Subscription and Allotment agreement.”
“You should be reminded that the timelines involved in this process are of utmost importance,” Mr Biribonwoha noted.
ICT minister Chris Baryomunsi and Nita-U executive director Hatwib Mugasa.
NITA-U Executive Director Mugasa in an April 4 reply said “… NITA-U is in the final stages of compiling and will submit the information through the Ministry of ICT by April 5”.
A day later, he authored another letter, in which he this time noted that requested information touching on financials, contractual and service provider specifics “may violate the confidentiality and non-disclosure requirements under the existing contracts”.
NITA-U later submitted the additional information requested by ROWARD, but the investor, whose executives are flying in this week to resolve outstanding issues, claims the information provided is still “insufficient.”
