UGANDA'S KARUMA DAM A STUDY IN IMPUNITY

The energy ministry must be glad for the current media focus on the Office of the Prime Minister and the public service ministry.

The daily revelations about the massive hemorrhaging of tax payers’ money into the pockets of a handful of officials had us all riveted that we missed the ruling two weeks ago by the civil division of the high court.

The issue was the ruling on an application for a judicial review of the tendering process to construct the 700 MW Karuma power dam in northern Uganda.

In October, frustrated by the tender process and suspicious that the energy ministry officials had contrived to award the contract to another bidder China International Water & Electric Corporation (CWE), Salini S.p.A applied for a judicial review of the process.

So on November 16^th high court justice Eldad Mwangusya delivered his ruling.

But first some background.

The $2.2b Karuma Dam is going to be the biggest single investment project in the country’s history. Bids were opened in November last year and according to the time line the winning contractor was to take possession of the site in March. The project was supposed to take six years to completion.

Inexplicably the evaluation process took long, bursting the original timelines. Then rumours begun to fly of money changing hands and that the process had been short circuited and the contract awarded anyway to the CWE.

Several of the bidders called for an administrative review of the process – which entails going over the way the process had been handled, but realizing that energy ministry officials were hell bent on the awarding the contract they resorted to the courts.

In the application for a judicial review Salini sought to have the court pronounce itself on eight issues whose net effect was to find that procurement rules had been flouted and to hold the attorney general and the executive director of the government’s procurement agency (PPDA) responsible, to call for a reevaluation of the bids by independent evaluators.

Short and long of it Justice Mwangusya ruled in Salini’s favour on all but one ground.

This of course further delays the Karuma further and at the rate at which we are going it will be a miracle if construction begins before the next budget.

But the most jaw breaking part of the ruling was in reference to a letter written by the attorney general to the CWE General manager.

The letter “Stated among other things that the bidder should state the terms and conditions that should be included in the contract. This actually means that the contract has already been awarded to this bidder yet the procurement process is still ongoing,” Mwangusya said.

He said this was contrary to the PPDA act adding that, “The very essence of the statute has been frustrated by the persons that are mandated to safeguard it.”

The background to this letter to CWE was a meeting that was held with President Yoweri Museveni on August 14 where the energy minister Irene Muloni, her junior minister Simon D’Ujunga, the ministry’s permanent secretary Kaliisa Kabagambe, Attorney General Peter Nyombi presented CWE officials to Museveni.

In the meeting it was agreed that CWE presents guarantees from its parent company China Three Gorges Corporation in order to get the contract, a request that was irregular in that no other bidder was asked for a guarantee. Why it was necessary for CWE to provide a guarantee is another story.

A lot of deals have gone down in this town, many of which we have never been privy to, but August 14^th will have pride of place as one of the darkest days in Uganda’s history.

What was happening in this meeting? Was the president made aware that the meeting with a bidder in an ongoing process was a flouting regulations? Did he know that the meeting in offering remedies to CWE’s bid would be detrimental to the process? What did the relevant ministers and technocrats seating in the meeting advise?

“It is trite law that an illegality once brought to the attention of the court cannot be ignored,” Justice Mwangusya said in reaction to the letter that came as a result of that meeting.

The addition of Bujagali’s power onto the grid earlier this year has removed the urgency for more power to alleviate loadshedding. However it is expected that new demand will suck up all his new power within the next 18 months sending us back to the days of loadshedding.

Officials have been heard to mutter that it is bidders running to court that are frustrating the process, but on the other hand if such blatant disregard of procedure were not there what grounds would there be for appeal. This is not the first tender we are doing in this country.

In more cultured society somebody should be stepping down, getting fired or worse, but then again what do I know?

UGANDA AIRLINES? HOW CAN WE TRUST PUBLIC OFFICIALS

The recent spate of revelations about stolen government monies blew away the argument that government does not have enough money to improve education and health services or build roads or dams or any of those things we badly need.

But more importantly it cemented my belief that the best thing this government did for us in the 1990s was to privatize all our state owned enterprises.

Can you imagine what would happen if Uganda Posts & Telecommunications still had a monopoly or Uganda Commercial Bank still straddled the financial or UEB was in charge of our power sector or …. We would still be in the Stone Age.

This may or may not be an indictment on the managers who run those companies, but the truth is government agencies have little or no incentive to be efficient never mind what the politicians say.

A government’s main pre-occupation is to hold on to power. How a government does that depends on the peculiarities of that society but is often a combination of improving service delivery and doling out patronage.

The need to improve service delivery in itself is the stuff successful companies are made off but when you include rewarding political supporters, service delivery becomes badly compromised.

That’s how services are concentrated in certain places and denied others, certain people have their debts to the company waived or certain people get jobs in that company and not others. And when government’s change it is out with the old and in with the new. Not the ideal business model to ensure sustainable success.

Given the above it goes without saying, government is not the most efficient allocator of resources. That’s why the world over governments indulge in projects with questionable universal benefits, white elephants, diverting much needed resources from more important services to massage constituencies and personal egos.

Which brings me to the issue of the reviving Uganda Airlines. Some MPs were in Kigali recently and came back singing praises about the Rwanda Air, their national carrier. The airline which is 10 years old flies to all the EAC capitals as well as South Africa, Dubai, Nigeria, Gabon and Congo Brazaville.

This was the cue for other interested parties to offer their two cents on the matter.

That as Ugandans we are embarrassed because we don’t have a national airline. That a national airline would make it easier to develop Entebbe Airport into a hub.  That there is now enough traffic to make a national carrier viable.

Is American pride hurt by its lack of a national airline?

An airport becomes a hub because of its location, infrastructure and the traffic going through it. Do you need and a national airline to become a hub?

The airline does not make your airport a hub but people wanting to come to your country or transit through your airport is what makes it a hub.

If the government really wanted to develop Uganda into a hub they would have done it as part of a wider strategy to improve tourism numbers or promote high value exports.

The billions of dollars that will be required to set up the airline and baby seat it to profitability will be better spent expanding and revamping Entebbe airport, improving infrastructure generally and to the tourist sites in particular, financing and executing a well thought out marketing plan for the country. Those actions will get us the much desired hub.

The way I see it we have more pressing matters than opening up more avenues for a handful of elite to rip off our taxes.

Some people argue that an airline will make the government money. I manage to fall off my chair every time this one comes up. Government would benefit from an airline if it was profitable so they can collect corporation tax and earn a dividend. The operative word there is profitable.

To be profitable the airline will have to capture a sizeable share of the several hundreds of thousands of passengers flying through Entebbe airport. To do this it will have to offer a competitive service at a good price or government would have to institute some protectionist measures against other airlines. In the first instance government would be tempted to subsidise the company’s operations or make service in and out of Entebbe suffer in the case of the second course of action.

Returning to the issue of governments seeking to perpetuate itself in power – service delivery and patronage, connections out of Entebbe  are good so should we think that calls for a new airline are just a way to widen the surface area for “eating” in government?