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Bribery hits 600MW Karuma power dam

By Mubatsi Asinja Habati

Political interference cited in appointments as government committee pockets billions to pre-qualify Chinese firm

If constructed, the 600 MW Karuma Hydropower Dam will be the biggest dam in the country. For now however, the project that should have started in the 1990s faces further delays. In the latest sign of ineptness, the team overseeing it is fighting over appointment of a manager who has promised to sort out the mess.

The fight over the Project Manager is raging at a time when police is investing the same team, which comprises 12 officials from the ministries of Energy, Finance, Works, Water and Environment, over allegations its members took bribes to prequalify incompetent constructors for the US$ 2.2 billion (Approx. Shs 6 trillion) project.

Uganda has a huge electricity deficit and outages are commonplace. There is, therefore, a growing view that since it appears impossible to get Uganda government officials to approve anything without bribing them, attention should shift to ensuring that they at least select a competent firm to build Karuma Dam.

Three members of the committee have written a minority report disputing the majority position that favoured some pre-qualified bidders to win the Karuma construction contract. Sources involved in the process who spoke to The Independent on condition of anonymity say the technical competence of the evaluation committee to handle the pre-qualification process for bidders is questionable.

“Some of the bid documents the evaluation committee prepared and the questions they asked during interaction with some of the bidders show that they clearly do not understand what is required for the job,” said a representative of one of the bidders that lost.

Although, such accusations from losing bidders are nothing unusual, observers say the pre-qualification of bidders needed to be handled by a more competent team. So say the prequalification should have been handled by a consulting agency familiar with building dams.

Karuma Hydropower Dam is to be built underground outside the Murchison Falls National Park with a 9km dam water discharge tunnel, technically called the tailrace tunnel, running through the park. Although it was mooted way back in 1995, Karuma dam on the Nile River has failed to take off due to corruption and poor project implementation.

At one point it became a big issue when it sucked in then-World Bank executive director for eastern and southern Africa, Richard Kaijuka, then-head of the Parliamentary Committee on the Economy, Isaac Musumba and other MPs. At the time, it was alleged that a Norwegian company, Veidekke, which was lobbying to build Karuma Falls Dam had, through its British subsidiary Noricil, allegedly paid a US$10,000 bribe to a Uganda government official in 1999.

This time the Ministry of Energy has completed the feasibility study for the dam and completed two steps, in the three-pronged prequalification process involving the administrative, technical, and financial evaluation of bids.


But bickering has erupted over the position of project manager. The ministry advertised the position whose role would provide management advisory services to the government team; monitor the project implementation activities by both the Consultants and the Contractors and liaise with the Uganda Electricity Generation Company Ltd (UEGCL) and the Uganda Electricity Transmission Company Ltd (UETCL) to ensure timely completion of the evacuation transmission lines. Unlike the 250MW Bujagali Hydropower Dam which is a Boot (Build-Own-Operate-Transfer) project financed by the government of Uganda and Bujagali Electricity Ltd, the Karuma Dam project is to be fully financed, built, and operated by the government.

The central role of the project manager will be monitoring the consultants and Contractors management, coordination and control of engineering and construction of the project and advise the government and its entities (UEGCL, UETCL) on any required actions to ensure compliance with the agreed responsibilities / risk undertakings in accordance with the project implementation plan and budget. The job advertisement required applicants to have experience in tunneling and managing a project of the same magnitude in size (at least 250MW) and cost (at least US$ 0.7billion) in the last 10 years.

The Independent has information that even-after re-advertising the position, ministry of Energy officials are fighting over two candidates; Traugott Benz, a Swiss national and Graeme Watson, a British national; each with a variety experience in engineering stretching over 20 years.

The two were selected in February but a decision on the winner is pending because the favourite of the ministry officials, Graeme Watson, lacks the competence required, according to a whistleblower. Watson’s CV shows he has experience in undertaking feasibility studies, investigations, designs and documentation for hydro-electric power stations of a capacity of up to 358 MW in the East African region.

But a whistleblower within the ministry of Energy says Traugott Benz’s CV is richer because he is a member of the Swiss Committee on Dams, has experience in hydro-power plants (underground), tunneling works, and has been a project director for the 900MW Nant de Drance power plant in Switzerland, among others.

The Independent could not independently verify the accuracy of the CVs but the whistleblower claims Traugott Benz is losing out because he is more expensive and asked the evaluation committee some tough questions during his interview.

The whistleblower says the real reason for alleged sidelining of Benz is because he promised to review all bid documents, evaluate the bidders, and give an independent report.

“This did not go down well with some ministry of Energy members on the interview panel. Mr Benz is being sidelined on the pretext that he is too expensive yet they have not had any negotiations with him on that matter apart from the brief interview,” says the whistleblower.

The whistleblower alleges that the squabbles over who should become the project manager would leave government taking a bad deal and lead to non-performance challenges that have dogged most government projects.

Big money fights

Earlier there have been battles in the evaluation committee over who finally takes the tender.  Two Chinese companies (China Water and Electric Corporation and Synohydro Corp) and an Iranian company (Perlite Construction) were selected out of six companies that bided.  Since then, however, members of the evaluation committee have been quizzed by the police’s Special Investigations Unit on allegations that they had they pre-qualified a Chinese firm with doubtful credentials after some US$1.2 million changed hands.

Earlier, another Chinese company, through its local front man who is a prominent businessman in Kampala, had allegedly offered US$600,000 to some members of the evaluation committee. But when the other bidder learnt of it, they doubled the bribe to US$ 1.2 million.

Apparently the company that offered lesser bribe resorted to whistle-blowing and  pointed out inconsistent information provided by the other company in their bid forms. President Yoweri Museveni intervened and ordered an investigation into the evaluation committee.

“The evaluation and investigation is ongoing. Karuma dam will not start this month but it will start soon once the evaluation of the bidders is complete,” says Simon D’Ujang, the Minister of State for Energy.

Three members of the committee have written a minority report disputing the majority position that favoured the inclusion of one of the Chinese firms among the three pre-qualified bidders from which a contractor for construction of the power plant will be selected. The trio argues that China International Water and Electric Corporation, CWE, made it to the final list despite glaring inconsistencies in its bid documents.  But this allegation has led to the technical competence of the evaluation committee to handle the pre-qualification process for bidders to be questioned.

When contacted for a comment, Henry Bidasala, an engineer and member of the evaluation committee declined to comment referring The Independent to the minister.

If construction of Karuma is handed to a doubtful company, it could endanger the energy security of the country. Insider information indicates that one of the prequalified Chinese companies has already contacted the French company, Vince Construction, which bid but was dropped, to work with it as a subcontractor. Western donors have also voiced their concerns over the size of the power dam arguing that it is too big and advising that a 450 MW dam would be better to match the available stream and the excess capacity is wastage of scarce resources. But the government has turned a deaf ear and is focusing on the contractors from the East.

Karuma is one of the critical hydropower projects aimed at solving Uganda’s protracted power crisis that has hurt the operations of industries, business and homes. Uganda’s electricity supply stands at 330MW while demand is 455MW and growing at 9% annually. Sector experts say Karuma needs to be completed quickly because completion of the 250MW Bujagali plant this year will only ease the situation for three years.

Karuma timeline

1995: Uganda government announces plans to construct electricity dam at Karuma.

2006 (October): Norpak, a Norwegian firm submitted the feasibility study and Environmental Impact Assessment to government of Uganda.

2006 (November): Bids for construction of the project were received. Initially, the plan was to build a 200-250 MW power station.

2009: The plans were redrawn, calling for a much larger project of 750 MW. At the same time Norpak pulled out of the project citing the global economic meltdown.

2009 (November): Government contracted Energy Infratech Pvt. Limited of India to perform new Feasibility Study and Environmental Impact Assessment.

2011: Energy Infratech Pvt. Limited submitted its report.

2012 (January): Construction bids called and evaluation begins amidst bribery allegations.

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