Thursday, August 15, 2013

Ayago power project (Uganda) 'snatched' from Turks

Ayago power project (Uganda) 'snatched' from Turks

By, Nelson Wesonga
15 August 2013, Daily Monitor

KAMPALA- The [Ugandan] government has reallocated the $1.9 billion
(Shs4.9 trillion) 600MW Ayago Hydropower Project from a Turkish company
to China Gezhouba Group.

The deal, which is said not to have gone through competitive bidding,
restricted or otherwise, is $210 million more than what Sinohydro
Corporation will get for the 600MW Karuma HPP. The reallocation comes
against the backdrop of Japan's International Cooperation Agency (JICA)
pulling out of studies that would have helped establish the feasibility
of Ayago HPP.

According to a source, the government's decision to hand Ayago HPP to
China Gezhouba Group was taken after the government's trump card to get
the Japanese to fund the project backfired.The government had in April
upped the ante by 'awarding' the Ayago HPP engineering procurement and
construction (EPC) contract to Mapa Construction, a Turkish company.

That did not impress the Japanese who had already sunk about $2 million
(Shs5.2 billion) in Ayago's feasibility studies. It is then that the
Japanese decided to pull out. The ministry of Energy claimed that the
Japanese had pulled out of the study "due to the perceived adverse
environmental impacts" that could manifest themselves once the project
kicks off. A document seen by this newspaper indicates that the $1.9
billion project along River Ayago, and straddles the Murchison Falls
National Park, would affect the daytime habitat of the hippopotami

It remains unclear how the government plans to reassure other potential
investors in the energy sector that what happened to the Japanese and
the Turks will not happen to them.

Meanwhile, the government handed China International Water and Electric
Corporation (CWE), which the Inspectorate of Government faulted for
falsifying its portfolio, the $535 million (Shs1.3 trillion) 188MW
Isimba HPP.

CWE had claimed it constructed a 600MW dam so that it could meet the
benchmarks for Karuma.In June, the company asked for "a lead role" in
the construction of Karuma, claiming that Sinohydro had copied CWE's
construction blueprint. We could not independently verify CWE's claim
with Sinohydro.

In the same month, CWE petitioned the East African Court of Justice
(EACJ) to compel Uganda to follow procurement laws in sourcing for an
EPC for Karuma. The court is yet to decide on the issue.

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