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Fresh row hits $8bn railway deal

By Vision Reporter

Added 2nd September 2014

Fresh controversy is stalking the over $8b Standard Gauge Railway deal, with the company that lost the deal seeking audience with the President.

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By David Lumu & Joyce Namutebi

KAMPALA - Fresh controversy is stalking the over $8b Standard Gauge Railway (SGR) deal, with the company that lost the deal, China Civil Engineering Construction Corporation (CCECC), seeking audience with President Yoweri Museveni.

The company says Uganda risks paying over sh50b in legal costs for cancelling its earlier agreement with the Government and giving the deal to a rival firm, China Harbour Engineering Corporation (CHEC).

The disagreements between the two companies emanates from the award of the contract to upgrade the Malaba-Kampala and Bukasa port railway line to standard gauge or high capacity gauge meant to speed up the movement of cargo from Mombasa in Kenya.

China has agreed to fund the first phase of a standard gauge railway line, linking Mombasa to Uganda, Burundi, Rwanda and South Sudan.

Last week, works state minister John Byabagambi signed a memorandum of understanding (MoU) with CHEC, sealing the sh20 trillion railway project. This was after terminating the MoU with CCECC.

The CCECC legal representatives told New Vision that before they go to court, they want to meet Museveni to discuss the behind-the-scenes manoeuvres and what transpired during the negotiations CCECC had with Byabagambi’s team, including how they were mistreated.

Sources said the meeting is expected to take place when the Chinese ambassador to Uganda, Zhao Yali, returns from leave next week.

Stalled talks
 

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Works minister Abraham Byandala (left) and his deputy John Byabagambi


However, Byabagambi told New Vision that upgrading a railway and the construction of a standard gauge railway are two different things.

“We found inadequacies in the technical and engineering components they did. They were based on Google mapping, not aerial surveys and topographic surveys,” he said.

On June 8, Byabagambi cancelled CCECC’s contract that had been signed in 2012. Subsequently, CCECC’s representatives went to court and on July 23, the High Court overruled Byabagambi’s decision and advised the two parties to negotiate.

Early last month, CCECC and the Byabagambi teams negotiated for two days at the Uganda Railway Corporation headquarters, but the minister suspended the talks following disagreements between the two parties.

Fight over routes

 In February, Museveni wrote to works minister James Byandala, advising that CCECC and CHEC work on the standard gauge project together.

But during a high-level meeting between CHEC and CCECC on March 18 at the Ministry of Works headquarters, Byabagambi, who chaired the meeting, said: “CCECC will be awarded the western route (Kampala-Kasese) of the Uganda SGR project, while CHEC will be awarded the eastern route (Malaba-Kampala) of the Uganda SGR project.

“The basis for this decision is the MoU between CCECC and CHEC with the government of Rwanda and South Sudan respectively.”

During the meeting, CCECC protested the move to award the eastern route to CHEC. CCECC disagreed with the arrangement of not retaining the Kampala-Malaba route and Byabagambi cancelled their contract on June 8.

On August 27, Byabagambi signed the MoU with CHEC to undertake the project.
 

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MPs protest

On Friday, five MPs announced that they will, this week, move a motion in Parliament, calling for an investigation into the allegations of infl uence peddling in the railway deal.

MPs Theodore Ssekikubo, Wilfred Niwagaba, Abdu Katuntu, Barnabas Tinkasiimire and Paul Mwiru said by signing the MoU with CHEC, Byabagambi defi ed the July 23 High Court decision, which had overruled his decision to terminate CCECC’s contract.

But Byabagambi said his decision to award CHEC the contract was cleared by the Ministry of Finance and the Solicitor General.

UPDF explains role

The contract controversy has also forced the UPDF to deny any role in infl uencing CHEC to be given the contract.

Army spokesperson Lt. Col. Paddy Ankunda told New Vision over the weekend that some players, including the media, have been using terms such as “UPDF-backed Chinese firm to get railway deal,” which he said might be misinterpreted.

“We had no role in the award of the contract to CHEC. What we had is an understanding with the company contracted by Government,” he said.

According to the MoU, CHEC will work closely with the UPDF engineering brigade during the construction period.

Capacity building

Ankunda said CHEC would build the capacity of civil engineers in the UPDF and also revamp the UPDF polytechnic at Rubongi in Tororo.

“We are going to benefit in terms of capacity building because this is a huge strategic long term project for the country,” he said, revealing that the training would not be exclusive to soldiers, but even civilians who are interested in learning civil engineering skills.  

Railway project timeline
 

  • Oct. 29, 2010: Museveni invites CCECC to work on the railway with the UPDF
  • Jan. 2012: CCECC signs MoU with works ministry
  • Apr. 18, 2013: UPDF, CHEC sign MoU
  • Aug. 20, 2013: CCECC meets Ministry of Works officials
  • Dec. 17-20, 2013: Government due diligence team travels to China
  • Feb. 5, 2014: Works ministry seeks advice from AG to terminate the MoU with CCECC
  • Feb. 19: President confirms CHEC and CCECC to build the railway
  • Feb. 26: Attorney General writes, advising against termination of the MoU
  • Mar. 20: Works ministry notifies CCECC of intention to terminate MoU
  • Apr. 14: Solicitor General raises concerns about the railway deal
  • May 23: Byandala writes to the AG, asking for advice. AG advised against termination of the MoU
  • Jun. 8: Byabagambi writes to CCECC, terminating the MoU
  • Jul. 8: CCECC sues the Government over the cancellation of the contract
  • Jul. 23: High Court overrules Byabagambi’s decision on the MoU
  • Aug. 8: Byabagambi invites CCECC for talks.
  • Aug. 12: CCECC and the Government disagree during the talks
  • Aug. 22: Byabagambi writes to CCECC calling off negotiations
  • Aug. 27: Byabagambi signs MoU with CHEC to construct the railway

 

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