Monday, June 6, 2016


Dam building contractors are taking advantage of Uganda’s desperate need for power to inflate costs, turn in shoddy work and jeopardising the multi-billion dollar Karuma and Isimba dam projects in the process, experts have said.

Work on the $1.7b Karuma power dam kicked off at the end of 2013 – more than nine months after it was supposed to have started.  A protracted procurement that involved many competing interests, roped in the Inspector General of Government (IGG), Attorney General, the cabinet and there was an attempt to dupe President Yoweri Museveni to short circuit the procurement process in favour of one firm.

It was in and out of court several times before Museveni stepped in to resolve the issue.

Chinese firm SinoHydro was contracted to build the 700 MW Karuma dam and China International Water & Electric Corporation (CWE) was awarded the 183MW Isimba dam.

And one would have thought that would have been in the end of the saga.

In the hurry to get construction running the energy ministry signed on SinoHydro and CWE, and contracted a single engineering firm Energy Infratech pvt ltd (EIPL) of India to supervise construction on the ministry’s behalf, which was irregular practice giving two such big projects to one firm at a go.

Once these contracts had been locked in the energy ministry then signed a memorandum of understanding with Uganda Electricity Generation Ltd (UEGCL) for them to oversee implementation of the two projects.

"But that undertaking was on paper only as the energy ministry has never – two and half years after the memorandum was signed in December 2013, handed over the two projects to UEGCL...

Months into the project and after several monitoring reports UEGCL complained that works on the dams were not going according to the specifications and requested a second opinion on the projects.
Austrian firm, ILF Consulting Engineers – hired by UEGCL, did an audit of the project and issued a damning report. 

The Austrian firm reported that there project organisation structure was confused, there was conflict in the roles between the energy ministry and UEGCL, the project was running out of money, questioned the competence of the supervising engineers and warned that these shortcomings, among others, would “impair the quality, cost and progress of the projects”.

Some shuffling of staff to appease the auditors were done between the reports release in June last year and the end of 2015 but UEGCL’s newly hired project managers – SMEC for Isimba and AF-Consult for Karuma raised serious doubts about the quality of work on the projects.

Press reports earlier this year highlighting the mess forced the energy minster Irene Muloni to carry out a snap visit to the sites and report her findings to the president.

"Among other things huge cracks were found in both dams that raised obvious concerns about the integrity of the dams...

As a result in April Museveni directed that the projects’ implementation be handed over to UEGCL, suspended three ministry officials – Commissioner Paul Mubiru, Henry Bidasala Igaga and Cecelia Menya and ordered immediate remedial works on the dams’ problems.

Two months after Museveni’s directive work has been suspended on the Karuma dam and an adhoc committee to investigate the failings of the contractors and the supervision g engineers is ongoing.
At the end of April the finance ministry’s permanent secretary Keith Muhakanizi wrote to his counterpart at the energy ministry Kabagambe Kaliisa informing him that following the presidential directive all funds earmarked for the two dams should be transferred to UEGCL.

“The purpose of this letter therefore, is to request you to urgently advise this ministry on the resources in your budget to be transferred to UEGCL for this purpose to enable us appropriately programme and plan for disbursement of funds during the execution of the FY 2016/17 budget,” Muhakanizi wrote  on April 27th .

In his response Kabagambe Kaliisa unleashed a barrage of conditions that have to be met before his ministry hands over control of the sites to UEGCL including, amendment and termination of certain contracts, establishment of what is being handed over, licensing of UEGCL to comply with the Electricity Act 1999 and an orderly hand over of works in progress.

“Given the need to expedite H.E. the President’s directive, I am seeking a legal opinion of the Solicitor General in order to execute the directive I a non-disruptive and lawful manner,” wrote Kabagambe Kaliisa.

"However, experts familiar with situation worry there is no sense of urgency being shown by the energy ministry in remedying the situation which may escalate the costs of the projects and burst initial timelines...

“If things continue the way they are going these projects may not give the required power, durability will not be guaranteed, maintenance costs will jump and we can expect extended shutdowns once the dams are commissioned,” one dam engineering expert told the Business Vision.

Attempts to contact energy ministry permanent secretary Kabagambe Kaliisa proved futile.
The source also criticised the close relationship between the owner engineers, EIPL and the contractors at both sides, which they said is not good for the oversight role they are supposed to play.
One report that was presented to the adhoc committee listed several incidents where the contractor, SinoHydro in an attempt to reduce costs for himself without passing on the savings to the Karuma project, did substandard work on the dam, neglected to install a cooling plant, skimped on building employee facilities and installing an onsite communications network.

The savings from the contractor’s tightfistedness were estimated at more than $45m (sh157.5b).
In addition questions were raised about the use of lower quality cement than was specified in the contract. The tender design called for concrete grade C60 but SInoHydro are using C40 and the owner engineer has looked the other way.

The higher grade concrete sets faster – useful in structures which will come up against water, and can take more pressure than the lower grade concrete in a given time.

Other incidents that suggest a more than cordial relationship between the SinoHydro and EIPL are the use of designs that were not in conformity with the feasibility designs.

"The experts warned that because the works are so below standard especially at Karuma that, “The repairs required are so extensive that they cannot be done in the remaining two or three years of the project.”...

However the engineers said the projects can be completed in time.

“But only if the status quo is changed immediately and work is done properly with proper supervision otherwise these projects are accidents waiting to happen, costly accidents worth hundreds of millions of dollars,” he warned.

Uganda has an installed power generation capacity of about 800 MW but with demand rising by 22.7 percent one can expect power demand -- now at about 510 MW during peak periods will outstrip supply within three years.

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