Karuma Dam tender process on track

By Ibrahim Kasita

THE procurement process to construct the proposed 600megawatt (MW) Karuma Hydropower project is going on as planned, energy minister Eng. Irene Muloni has said.

“Nothing is going to stop us from selecting the best and competent bidder as long as we are following the law,” Muloni said over the weekend.

“This (Karuma) project is very important for meeting the country’s energy needs and we cannot afford any delays. The procurement process is still going on according to our plans.”

The minister said complaints related to procurement process have always delayed infrastructure projects, but warned that there was need to be worried about certain elements bent on sabotaging economic progress.

The remarks follow a New Vision report last week that the Public Procurement and Disposal of Public Assets Authority (PPDA) had suspended the process of tendering the $2.2b power project.

This was based on allegations that a bidder, M/s China International Water & Electric (CWE), was passed on the technical stage based on “misrepresented facts about its capacity to deliver on the 600MW project.”

The paper quoted an un-named lawyer, who said: “To open the financial bids without notifying the bidders of the technical report is illegal and not transparent but we should also ask the energy ministry’s accounting officer why he has sat on the bids from the closing date last November.”

Kabagambe Kaliisa, the permanent secretary in the energy ministry and also the accounting officer, confirmed receiving the complaints, but said they “were not valid” and “cannot stop the tendering process.”

“The complaints are intended to incite the accounting officer to disclose confidential information to cause mis-procurement (abort the exercise and cause delays),” he said.

“This is against the law and I cannot release any information regarding procurement until the process is successfully completed.” 

According to the PPDA Act 2003, a procurement and disposal entity (in this case the energy ministry) shall not, except when required to do so by an order of court, disclose any information.

Such disclosure could amount to a breach of the law, impede law enforcement, prejudice legitimate commercial interest of the parties, inhibit fair competition or in any way not be in public interest until the successful bidder is notified.

“We do not have the best evaluated bidder. But we are handling those complaints in accordance with the law,” Kaliisa said.

“These complaints are sending wrong signals to our bidders and this is sabotage of our economy, similar to what happened with the Bujagali project 10 years ago.” 

The just-completed 250MW Bujagali Hydropower Project was planned in 1995, but due to rumours of bribery and corruption, the dam delayed for over 10 years.

This resulted into the increase of the project costs from $350m to close to $1b.

Statistics from the Electricity Regulatory Authority indicate that peak demand is growing by 10% every year, and there is need to commission at least 50MW every year if Uganda is to avoid undesirable load-shedding.

Already, electricity demand has increased sharply, a month after Bujagali delivered 250MW to the national grid, a signal that policy makers should be bringing new projects online to prevent a reversion to loadshedding.

The increased demand is due to intensified investment in industries that heavily rely on electricity and heightened economic activities.

The National Development Plan (NDP) identifies limited generation capacity and corresponding limited transmission and distribution network as key constraints to the performance of the energy sector.

The NDP further cites increasing power generation capacity as the first objective to address this problem and construction of larger hydropower plants as the first intervention strategy.

The current situation of power demand and power supply option for Uganda, therefore, indicate the proposed Karuma Hydropower Project as a much-needed development as it will add up to 600MW to the national grid.

It will deliver electricity to consumers at an average price of sh300 per unit over five decades. 

A delay in the project will set the country back.

Karuma project background

• The project was conceived in the early 1990s as a potential to generate 200Megawatts (MW)

• In mid-1990s, a Norwegian firm, Norpak, acquired exclusive rights to develop the project.

• However, the firm held on-and-off negotiations with the Government to start work, but with the prospect of developing the 250MW Bujagali Hydropower Project in the late 1990s and early 2000s, the project came to a standstill.

• Early 2008, Norpak pulled out after a protracted conflict with the World Bank. It handed the project designs, maps, ground investigations and other information to the Government.

• The Government made a decision to increase capacity from 200MW to 600MW after feasibility studies confirmed that the water flow could generated that amount of energy. The studies were concluded in 2010.

• President Yoweri Museveni ordered that the money in the energy fund ($75m) be used to kick-start the project. This was the same amount that was used to kick-start the construction of the 250MW Buagali hydropower project.

• Museveni also directed that all the oil money, close to $800m, be channeled to finance the project.

• The energy ministry is in the process of procuring the contractor. Due diligence on the interested bidders is on-going.

• Work on the dam is expected to start in the fourth quarter.