Friday, April 6, 2012

Uganda: Karuma corruption?

Uganda's second big dam in a decade; the first, Bujagali, was delayed
because of corruption; now it looks like Karuma suffers from
corruption too. The other controversy is that Uganda wants to build a
higher-capacity dam than the river can support, and is ignoring
international advice on this aspect. This would be the third large dam
in Uganda to be unable to produce the full amount of power the dam
promoters claim.

Karuma tender board probed over $1.2m �bribe�

By MICHAEL WAKABI (email the author)

Posted Saturday, March 31 2012 at 13:15

Uganda�s planned 660MW Karuma Hydro Power Station has run into early
trouble with police investigating allegations of possible bribery in
the project, whose estimated contract value is $1.6 billion.

The EasAfrican has learnt that members of the 12-man bid evaluation
committee appeared before the Special Investigation Unit of the police
last Tuesday, to respond to allegations that they had pre-qualified a
Chinese firm with doubtful credentials after some $1.2 million changed

(Read: Donors query Uganda on excess capacity in Karuma dam)

It is further understood that as part of the continuing fallout from
the flawed bid evaluation process, three members of the committee are
writing a minority report that is at variance with the majority
position that favoured the inclusion of the Chinese firm among the
three pre-qualified bidders from which a contractor for construction
of the power plant will be selected.

While a senior figure in the Ministry of Energy declined to comment on
the developments �because I have heard the same rumours but I don�t
have specific details at the moment,� he confirmed that members of the
evaluation committee had indeed been questioned by police in relation
to the allegations. Police are trying to establish the circumstances
under which the China International Water and Electric Corporation,
CWE, made it to the final list, despite glaring inconsistencies in its
bid documents.

According to documents that The EastAfrican has seen, in August 2010,
the Ministry of Energy sent out a request for proposals for the
construction of the Karuma power plant. Among the key conditions for
eligibility was a requirement that the contractor demonstrate that it
had undertaken works involving construction of an EPC project with an
underground power house, a total tunnel length of at least 20
kilometres with a suitable excavation technology and a generation
capacity of 600MW or more. The bidders were also required to
demonstrate they had handled three similar projects in the past five

Six firms, among them Sino-Hydro, China International Water and
Electric Corporation, Iran Par Light, Salini, Vince (in partnership
with Group 5 of South Africa) and Egypt�s Orascom submitted bids for
the engineering procurement and engineering contract for the project.
After evaluation, Sino-Hydro, CWE and Iran Par Light were pre-
qualified ahead of final selection of a winning bid. The CWE bid
however, raised eyebrows after it emerged that some of the claims it
made in its bid documents about its experience were in conflict with
facts about the same projects from other sources, including its own

For instance, whereas CWE claimed to have constructed the QingShan
Hydropower Station to a capacity of 640MW supplied by four generation
units, the takeover certificate signed by the station�s operator on
June 26, 2006, puts the plant�s capacity at 20MW supplied from two
units of 10MW each. CWE also claims the contract was worth
$351,650,213 when actual cost was in the region of $20 million.

CWE�s claims

In it bid documents, CWE also states it designed and commissioned the
300MW Moinak Hydropower Station in Kazakhstan, where it claims to have
tunnelled to a length of 21 kilometres. However, on its website, CWE
states a tunnel length of only 9.2 kilometres. For the Daingjiang-2
hydropower station, CWE claims a capacity of 600MW and a 26-kilometre
tunnel whereas supporting documentation for the project indicates an
installed capacity of only 70MW and a 1.2 kilometre long tunnel.
Contrary to the $315,560,827 it assigns the contract, the actual
project cost just $63,392,116.

For the 40.5MW Leiyang power station that it claims to have built in
China, CWE assigns a capacity of 405MW and cost of $260,521,125 in the
bid documents it submitted to Uganda, rather than the actual cost,
which was $68 million. Closer home in Sudan, CWE claims to have been
the main contractor of the 120MW Merowe power station, whereas
available information indicates that its partner in the joint venture,
CCMC, was the actual lead contractor. These inconsistencies have led
to fears that if CWE were to get the Karuma contract, the whole
project would be at risk.

Karuma is intended to forestall a possible return to massive
electricity rationing and thermal generation in 2016, when demand is
expected to overtake the new capacity being supplied by the 250MW
Bujagali Hydro Power Station.

Speculating on options for Uganda in light of the tendering scandal,
the senior Ministry of Energy official suggested that to avoid delays
that would be associated with re-tendering and �a possible return of
the same issues,� one solution would be to proceed with the evaluation
process normally and then disqualify CWE and blacklist it from future
participation in Uganda projects. This would be the prudent course
given the importance of this project to the national economy,� he said.

That would leave only Sino-Hydro and Iran Par Light in the race, but
with international sanctions hanging over Iran, it would be foolhardy
to trust the latter firm with a huge tender at the moment.

The new turn of events appears to vindicate earlier concerns expressed
by Western donors, who were baffled by Uganda�s refusal to involve
them in the procurement process for Karuma Hydro, even when the advice
was offered free of charge.

When contacted, however, Assistant Commissioner Electrical Power
Division Henry Bidasala, a member of the committee that is under
investigation, said the project was progressing well and was halfway
through the bidding process. The suspect committee is made up of
representatives from the Energy, Finance, Works, Water and Environment

Related, earlier editorial:


Karuma dam: Is it wise to lock out donors?
Share BookmarkPrint Email Rating

Posted Sunday, January 22 2012 at 15:29

Uganda is locked in a standoff with its erstwhile donors over the
logical design and development framework for the proposed Karuma
hydropower station.

From Uganda�s preferred rating of 660 megawatts to the procurement
process, which so far appears open and transparent, Western
development partners are concerned. For one, they argue that their own
hydrological studies of the portion of the Nile where the power
station is going to be built show that the water flow cannot support
that output 70 per cent of the year.

But flush with money and a newfound sense of independence the Ugandans
are not listening. Ostensibly stung by delays to the Bujagali power
project, which stalled in the early 1990s as donors queried every
aspect of the project, the Ugandans don�t want a repeat. In the event,
they have locked the donors and their offers of �free� technical
advice out of the procurement process.

But if the aim were to get the best deal, there should be no harm in
considering alternative views, especially when they are coming at no
cost. Years before the 200MW Kiira power station became a white
elephant, fringe opinion warned that it would not deliver to

Then as now, an arrogant bureaucracy dismissed contrarian thinking.
Today, consumers are paying a heavy price by way of power rationing
and skyrocketing tariffs as a consequence of expensive, ill-structured
contracts for thermal generation. The current mess that concessioning
generation and distribution to private operators is mired in also
ample demonstrates that we are not as smart as we would like to think.

In the circumstances, there is no plausible reason for locking out
alternative knowledge other than setting the country up for another
grand scam.

You received this message as a subscriber on the list:

To be removed from the list, please visit:

No comments:

Post a Comment