Chinese firm goes to court over Ugandas railway project
Description: President Museveni flags off a train in Gulu, Uganda. The
government is accused of awarding the tender to a Chinese firm after signing
MoUs with another. FILE PHOTO
President Museveni flags off a train in Gulu, Uganda. The government is
accused of awarding the tender to a Chinese firm after signing MoUs with
another. FILE PHOTO
By JULIUS BARIGABA The EastAfrican
Posted Saturday, August 9 2014 at 18:06
IN SUMMARY
At the heart of the dispute are several Uganda government departments and
two Chinese companies -CCECC and CHEC.
American lobbyists are behind CHEC and pushing Uganda government executives
in the fight for $8 billion worth of contracts to build, upgrade and expand
Ugandas railway network to standard gauge.
SGR is one of the components of the Northern Corridor infrastructure
projects that the East African Community partner states started planning as
early as 2004, but in June 2013, the presidents of Kenya, Uganda, and Rwanda
agreed to fast track it, with a March 2018 deadline.
Ugandas plans for a standard gauge railway (SGR) are in disarray as the
government must now choose between playing fair and surrendering to
lobbyists interests.
At the heart of the dispute are several Uganda government departments and
two Chinese companies state-owned China Civil Engineering Construction
Corporation (CCECC) and China Harbour Engineering Company Ltd (CHEC).
But The EastAfrican has learnt that American lobbyists are behind CHEC and
pushing Uganda government executives in the fight for $8 billion worth of
contracts to build, upgrade and expand Ugandas railway network to standard
gauge.
The SGR is one of the components of the Northern Corridor infrastructure
projects that the East African Community partner states started planning as
early as 2004, but in June 2013, the presidents of Kenya, Uganda, and Rwanda
agreed to fast track it, with a March 2018 deadline.
In 1998, CCECC interested Ugandas then Ministry of Works, Housing and
Communication in a trolley bus transportation system in Kampala city, but
the ministry and President Yoweri Museveni instead interested the same
company in it the rehabilitation and development of Ugandas railway
infrastructure.
By 2004, the project was taking a regional outlook, and Museveni met CCECC
executives in Kampala and later in 2006, in Beijing, to discuss the issue.
In 2010, Museveni asked CCECC to work with the Uganda Peoples Defence
Forces to enable the army to develop capacity in rail construction. These
engagements crystallised into three memoranda of understanding (MoUs) with
the Chinese company, the first of which was signed on December 22, 2011 for
the construction of a new port at Bukasa in Uganda.
The other two MoUs were signed on January 13, 2012, one for the
rehabilitation and upgrade of the existing railway line from Malaba to
Kampala and the other for the line from Tororo-Pakwach-Gulu and expansion to
Nimule, then Juba in South Sudan.
CCECC went ahead to conduct feasibility studies for the two rail routes, and
submitted them to the Ministry of Works and Transport in April 2013.
However, even as CCECC was doing the feasibility studies, a rival firm in
CHEC appeared on the scene in August 2012.
Documents obtained by The EastAfrican indicate that President Museveni
issued a presidential directive in September 2012 to his Minister of Works
Abraham Byandala to accommodate CHEC, which was fronted by former US
assistant trade representative for Africa Rosa Whitaker, in the railway and
port projects, citing the groups goodwill in Beijing to source funds for
construction of the railway.
Rosa Whitaker ... brought to us a Chinese group known as China Harbour
Engineering Company that wanted to help source Chinese government soft loans
to build the railways in Uganda as well as a port on Lake Victoria,
Musevenis letter reads.
The weight of the powerful Whitaker Group forced Museveni to revise the
earlier MoUs with CCECC.
On March 14, CCECC was invited to a meeting with the State Minister for
Works John Byabagambi to discuss the next steps towards the final deals,
only to be told that its contract to build the SGR for Tororo-Pakwach-Gulu
and expansion to Nimule would be handed to another company, which had signed
a new MoU with the government. Instead, CCECC would be given the contract to
build the western route of the railway from Kampala to Kasese, which was not
part of the MoUs.
Besides this shabby treatment, the company claims that it had invested Ush50
billion ($19.3 million) on feasibility studies for the routes covered under
its MoUs with the Uganda government, fully sanctioned by the Attorney
General, Peter Nyombi, who also advised against termination of CCECCs MoUs,
according to official documents obtained.
However, on April 8 this year, Mr Byabagambi terminated CCECCs MoU for the
Tororo-Pakwach-Gulu line, saying that it was not binding. CCECC lawyers
argue that once the Chinese firm undertook to do feasibility studies, which
the government received as a sign of commitment to undertake the projects,
Kampala committed itself the argument that the MoUs were not binding was
then invalid.
More significantly, the president becomes a key player now as Mr Byabagambi
says in a June 15 sworn affidavit that he terminated the agreements with
CCECC under a presidential directive.
In further response thereto, I have not acted on this process unilaterally
as H.E the President of the Republic of Uganda and the summit members have
been giving direction as clearly shown in annexure B, he says.
Although the said annexure a July 2, 2013 letter by President Museveni to
Prime Minister Amama Mbabazi on railway infrastructure does not direct Mr
Byabagambi to terminate CCECCs MoUs, it raises further questions of
corruption in the projects and the multiplicity of agreements between the
government and Chinese firms for the same railway projects.
But the significant question President Musevenis letter raises is that of
financing, and is loaded with undertones of frustration as to why Ugandas
SGR remains on paper, while Kenya has already covered a lot of ground on
projects agreed on the same dates, with a similar completion deadline.
President Musevenis letter was triggered by Transport Minister Stephen
Chebrot, who wrote to the president seeking a way out of the impasse.
Before we go for a win-win solution suggested by Dr Chebrot, Hon Byandala
should answer the question: If some companies fulfilled their obligations
under the MoU and on time, why had the project not progressed by the time I
came in with the Engineering Brigade of the UPDF and, later on, with the
CHEC people? After that answer, then we shall see the way forward, reads
President Musevenis letter.
Chinas ambassador to Uganda Zhao Yali also cited financing hurdles when The
EastAfrican sought comment last Thursday on the bickering Chinese companies
that were costing Uganda a lot of time, projects running behind schedule and
how this would be resolved.
The financing for the projects is important; you have to know where you can
get the money. I am not ready to give comment right now because the Uganda
government is in consultation with the Chinese companies that are
contracting the railway project. But the financing is important, he said.
In the meantime, as the blame game goes on within government departments,
namely the Ministry of Works, Attorney Generals Chambers, the Office of the
President, Uganda Peoples Defence Forces, all pointing fingers at each
other for flouting fair play rules, lawyers are watching the developments,
and taxpayers will soon or later pick the bill for the litigation that will
arise out of this mess.
CCECC has already won round one after getting an injunction on July 14
against the Attorney-General preventing him from terminating its MoU for the
lucrative Tororo-Pakwach-Gulu railway line, which will eventually link up
with South Sudans line from Juba.
Thé Mulindwas Communication Group
"With Yoweri Museveni, Ssabassajja and Dr. Kiiza Besigye, Uganda is in
anarchy"
Kuungana Mulindwa Mawasiliano Kikundi
"Pamoja na Yoweri Museveni, Ssabassajja na Dk. Kiiza Besigye, Uganda ni
katika machafuko"
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