Shs84b climate change project stalls in Isingiro

Inyatsi Construction Limited are on the verge of pocketing a cool Shs61b from government of Uganda after successfully getting a ruling from Dispute Adjudication Board (DAB). Inyatsi Construction Limited is construction company incorporated in Eswatini.

For starters, it is more than two years since government kickstarted a Shs84b project intended to transform farming in Isingiro District through provision of water for irrigation to farmers and other agricultural services.

However, a series of contract breaches and delayed works have left the project in tatters, and matters have not been helped by the different contractions regarding the project future.

At the moment, the subcontractor is crying foul over the justice system, while the main contractor accuses the ministry of delayed works. On the other hand, government is blaming the legal undercurrents for the delay.

On this background, area leaders are up in arms and want government to take action before the situation turns from bad to worse.

Already, the biggest losers in the saga are the Isingiro farmers, whose hope has turned into despair. Meanwhile, several people who worked on the project have not been paid and worryingly, the abandoned project has become a death trap for the locals.

Court orders

While appearing before Parliament on November 28, Prime Minister Robinah Nabbanja said government was unable to make timely payments to Inyatsi due to restrictions imposed by court orders issued on August 30.

Court ordered the ministry to withhold an impending payment of Shs21.2b to Inyatsi. According to court documents, Plinth Consultancy Ser vices Ltd, which had been subcontracted by Inyatsi in April, 2023, got interim measures of protection from court. 

Plinth had convinced court that whereas it had executed all works on site from commencement until October 30, 2023, when Inyatsi terminated the subcontract agreement, the two sides were yet to reach an amicable settlement. Plinth filed a request to arbitrate with the International Chamber of Commerce (ICC) in May 2024, challenging the unlawful termination with a claim of Shs22b.

The arbitration process is still ongoing before the ICC. It is also important to note that the company representing Inyatsi Co Ltd in all these legal proceedings is K&K Advocates.

However, on examining the sequence of events, it is not correct to state that the ministry didn’t make timely payments to Inyatsi due to the court order as this is evidenced in the correspondences between the parties listed below; On September 2, in a termination notice from Inyatsi to the ministry, the former claimed delayed payment stretch from as early as July, 2023 to April, 2024 way before the court orders
existed.

On the other hand, in the ministry’s notice of intention to terminate the contract dated September 12, 2024, it confirms that only the fourth Interim Payment Certificate (IPC) issued on May 30, 2024 was pending as a result of the court order.

This, according to documentations, is wrong. The court order was issued after Inyatsi had given notice of termination, wapcos the project consultant had written over fiver warnings for nonperformance to Inyatsi Construction Limited.

Background

In 2022, government, through the Ministry of Water and Environment (MWE), obtained a $169m (Shs616b) loan from the World Bank to facilitate the Irrigation for Climate Resilience Programme (ICRP) and part of these funds were channeled to the construction of Kabuyanda Irrigation Dam in Isingiro District.

The ministry carried out an international competitive bidding and the contract for construction of Kabuyanda Earth Dam was awarded to Inyatsi Construction Limited. 

A contract was signed on November 22, 2022. However, the project commenced on May 11, 2023 and was set to be completed in 30 months. The delay was largely due to the contractor’s delay to provide contractual submittals such as advance payment guarantee and performance guarantee, whose submissions only happened in February 2023 (delay of nearly 60 days) this was out of order and that is when the ministry would have terminated the contract because the contract gives only 28 days for a contractor to submit the guarantees.

Execution

The project was finally handed over to Inyatsi Company Ltd (contractor) and Wapcos Ltd (Supervising Engineers/Consultant). The commencement of the project showed persistent slow performance which is seen in series of correspondences between the engineer and the contractor.

There was also lack of proper utilization of advance monies paid to the contractor to a tune of Shs17 billion. Copies of letters from the ministry requesting for evidence of utilisation of Advance payment from the contractor are also available but no satisfactory response was issued by the contractor.

The project progressed to about 13 percent by October, 2023 and further to 21 percent in October 2024 physical progress. For context, this is against a time progress of approximately 50 percent and 34 percent financial progress.

Termination/disputes

On August 3, 2024, Inyatsi notified the ministry of its intention to terminate the contract due to the latter’s failure to release more money in time and eventually slowed down works. This process continued until September, 2024 when Inyatsi notified the ministry of the termination of the contract.

The ministry rejected Inyatsi’s termination and ordered that it immediately returns to site to execute the project. However, Inyatsi rejected this. In return, the ministry, in a letter dated September 30, 2024, formally terminated the contract. Thereafter, Inyatsi submitted its final accounts claim of Shs36b, of which Shs17.6bn is interest, loss on profit and damages. 

Incidentally, Inyatsi received advance payment of Shs17b from the ministry in April, 2023 whose utilisation has remained unconvincing to the ministry.

Current status

The court orders being cited above have since been varied through a process that Plinth has chosen to challenge at the Constitutional court. It accuses the principal judge Flavian Zeija of acting on the letter of the solicitor general to allocate the file to another judge, Patience Rubagumya, who eventually overturned the earlier rulings.