Business
Fresh row hits $8bn railway deal
Publish Date: Sep 02, 2014
Fresh row hits $8bn railway deal
  • mail
  • img
newvision


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
 


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.
 


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

 

Also related to this story

Chinese firm CHEC given $8bn railway deal

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
Business guide in conflict resolution developed
A business guide for the business community to resolve conflicts without resorting to courts of law has been developed....
Mining to increase Agriculture production
Agriculture production in Uganda is set to increase with the establishment of mining and oil extraction industries despite concerns from the public that the discovery of oil in Uganda will affect the sector negatively....
Farmers to benefit from sh60b grant
UGANDAN farmers are set to benefit from a low-interest agricultural loan facilitated by a $24.7m (sh60b) grant from the International Fund for Agricultural Development...
Uganda’s coffee exports drop
UGANDA coffee exports for September fell by 7% to 207, 927 60-kg bags of coffee, compared with the same month a year ago, an industry source said...
Rugunda urges accountants to help entrepreneurs
The Prime Minister, Dr. Ruhakana Rugunda, has asked accountants to join the fight against corruption and aid growth of businesses by advising entrepreneurs on financial management and taxation....
Sh30b set for compensation on second phase of Northern Bypass
About 400 property owners are expected to be affected by the construction of the second phase of the Kampala Northern Bypass, the Uganda National Road Authority (UNRA) has said....
Do Ugandan tycoons prepare their children to take over their business empires?
Yes
No
Can't Say
follow us
subscribe to our news letter