Africa Review

By Michael Wakabi

July 13, 2013

As Presidents of Kenya, Uganda and Rwanda prepare to meet in Nairobi next month for a review of progress on resolutions they made in Entebbe late June, concern is emerging over recent developments in Kampala that threaten to derail East Africa’s grand rail project.

Just weeks to the meeting, Kampala is scrambling to work its way out of a maze of Chinese construction firms, all fighting for the lucrative tender to build a new railway network extending to the border with South Sudan and a new port on Lake Victoria.

During the two-day meeting between the presidents that ended on June 25, the three countries parcelled out roles to fast-track the development of key infrastructure projects.

Uganda was assigned the lead role in rail sector development and political federation while Kenya will champion the pipeline development and electricity sectors, and Rwanda the Customs, single tourist visa and EAC e-Identity card projects.

But implementation of the rail development could run into early trouble as the procurement process gets caught up in a maze of Chinese firms and their lobbyists.

At the centre of the bitter fight are four companies – China Civil Engineering and Construction Corporation, China Harbour and Engineering Company, China Communications Construction Company, and China Harbour Engineering Company Ltd (CHEL), who have signed memoranda with different arms of government.

The situation not only exposes Uganda to litigation, but could also result in a messy contest that could delay the project’s implementation.

One part of the story is that President Museveni, who wants the Uganda People’s Defence Forces to participate as a way of building capacity and lowering the construction costs of similar projects in future, made an offer to two different Chinese firms. It has also emerged that two of the contenders are actually different subsidiaries of the same mother company.

On February 17, 2004, President Museveni held a meeting with the chairman of China Civil Engineering and Construction Corporation (CCECC) in Kampala, during which they discussed the firm’s participation in the development of a regional railway network. A follow-up meeting was held between the company and then Minister for Works and Transport John Nasasira in October 2006.

In between, the scope of the project changed to include development of a modern railway network to replace the Kampala-Malaba-Tororo-Pakwach line as well as an extension to Nimule on the border with South Sudan.

Engineering brigade

Four years later, in October 2010, in a letter to the chairman of CCECC, President Museveni said he had directed his Works Minister and the Chief of Defence to work with the company “on modalities aimed at forging a working relationship that is aimed at paving a way for developing and implementing this massive infrastructure project.”

In December 2011, CCECC entered into an MoU with the governments of Uganda and Tanzania for the development of a new port at Mwambani, Tanga, a port at Musoma, supply of marine vessels to ply the route between Musoma and Kampala, construction of a new port at Bukasa in Kampala, and upgrading and extension of the railway line from Tanga to Arusha through to Musoma.

Omari Rashid Nundu, the Minister for Transport, then signed for Tanzania while Dr Stephen Chebrot, the Junior Minister for Transport, signed for Uganda.

A month later, in January 2012, Uganda entered into a separate MoU with CCECC under which the Ministry of Works committed to engage the Chinese firm as a sole contractor for upgrading the rail line between Kampala and Malaba.

In a surprise turn of events, however, Abraham Byandala, the Senior Minister for Works and Transport, also signed a separate MoU for the same project with another Chinese company, the China Communication Construction Company (CCCC) in March 2012.

The situation was compounded further when President Museveni wrote to Mr Byandala in September 2012, to assign the project to China Harbour and Engineering Company Ltd (CHECL), which had been introduced to him by US lobbyist Rosa Whittaker.

In that letter, the president accused unnamed officials in his government of infiltrating his meetings with CHECL, stealing minutes and selling its ideas to CCCC, the firm Mr Byandala had signed the MoU with.

Just as he had proposed in his October 2010 letter to CECC, the president directed that the firm Ms Whittaker was fronting for should work with the UPDF engineering brigade.

While President Museveni could have confused the new firm with CCECC, his latest instructions set the stage for a series of activities, culminating in new MoUs and a due diligence exercise that took three officials from the Works ministry to Cameroon and China. Among other issues, the team found that CHECL was a subsidiary of CCCC, the company the president accuses of pirating the former’s ideas.

Although the Ministry of Works is pressing ahead to enter a conclusive MoU with the CHECL, this comes against a backdrop of warnings from the Attorney-General, the Solicitor-General and the Ministry for Ethics and Integrity about the existence of parallel memoranda, and the financial and political risks this exposed Uganda to.

The findings

Already, CCECC claims to have spent $20 million on feasibility studies, whose findings it has already submitted to the Ugandan government.

At the end of a June 27, 2013 meeting that discussed the report of a due diligence committee, it was resolved that the Ministry of Works give the UPDF a “letter of no objection” to finalise an MoU between the parties.

Uganda’s Minister of State for Works John Byabagambi, who chairs the National Co-ordinating Committee, told The EastAfrican that while there was indeed a problem of multiple memoranda, he was optimistic the government would negotiate its way out of the sticky situation.

“I am seeing a way out, and the memoranda should really have no big impact on implementation of the project. There is only one that is open-ended, which has the potential to disrupt the programme. We shall sit with all the parties and find a way out,” he told The EastAfrican.

Uganda must move with haste to resolve the controversies. A meeting of the national technical committees is scheduled to take place in Nairobi on July 22 to prepare a brief for the heads of state meeting in August.

Mr Byabagambi blames Uganda’s situation on “oversight on the side of the people who signed the different memoranda,” and the uncoordinated actions emanating from “new people in the relevant portfolios sometimes adopting positions before knowing what had transpired before.”

But as Uganda wallows in confusion, Tanzania’s Deputy Minister for Transport Dr Charles Tizeba toldThe EastAfrican that his side had made progress, with feasibility studies and had even compensated residents in Mwambani, where Tanga port is to be built.