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Karuma Dam Project: IGG Halts Procurement Process


Uganda: Procurement Challenges Dog many Local Governments


NTV Uganda

The Public Procurement and Disposal of Public Assets PPDA, says that the procedures on contract awards and executions at local government levels remain weak. PPDA’s Director for Procurement Audit and investigation Benson Turamye  notes that the gap needs quick redress considering the Trillions of shillings in procurements handled by both the Central and Local governments.

Uganda overhauls procurement rules to ‘eliminate influence peddling’


SupplyManagement

8 April 2014 | Will Green

Government procurement regulations in Uganda have been revamped to support local businesses, speed up processes and “eliminate influence peddling”.

Under the changes bid evaluation teams will have to work to fixed time frames, and officials and ministers will not be allowed to bid for contracts with the government institution they are employed by or responsible for. A tribunal will also be established to handle complaints about the work of the Public Procurement and Disposal of Public Assets Authority (PPDA).

The new regulations include preference schemes that give advantages to local suppliers when procuring goods, services and works. Some contracts will also be set aside for young people, women and people with disabilities.

Meanwhile, officials “shall not sign a contract whose contract price is above the market price of the product being procured” to “eliminate cases of the government paying ridiculously high prices for procurements”.

Government bodies will be required to publish procurement plans, firms will be able to request information on unsuccessful bids, and in certain situations bidders will be allowed to submit a non-monetary “bid securing declaration” instead of using a costly bid security.

A PPDA spokesman said: “With 60 per cent to 70 per cent of the government budget being spent on public procurement and the public outcry against corruption and influence peddling, the law has been strengthened to limit who can provide services to government.”

The changes, which came into force in March, also include special provisions to enable faster and more efficient procurement of medicines and supplies for medical facilities.

The spokesman said: “The amendments will significantly change the way public procurement is managed in Uganda. Some of the immediate benefits are promotion of local businesses under the preference and reservation schemes, and efficiency in public procurement. The new law also demands great accountability from both public and private officials involved in procurement.”

Ugandan government suspends 58 suppliers


Supply Management

28 November 2013 | Will Green

The Ugandan government has published a list of 58 suppliers who have been suspended from bidding for public contracts.

The Public Procurement and Disposal of Public Assets Authority (PPDA) has suspended the firms for a range of reasons including submitting forged bid securities, works not completed on time and invoicing for work not carried out.

The suspensions range in duration from one to five years.

Among the firms is Amman Industrial Tools & Equipment Ltd, which has been suspended indefinitely for causing a $1.7 million loss to the government in connection with a contract to provide 70,000 bicycles.

In a statement the PPDA said: “The firms and their directors will no longer be allowed to participate in any public procurement process during the duration of their suspension.

“Some firms like Amman Industrial Tools & Equipment Ltd and their directors have been suspended indefinitely for causing $1.7 million financial loss to the Government of Uganda.”

A full list of the suspended providers can be found here.

 

Chinese maze: Uganda’s procurement mess threatens East African rail project


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.

99 percent of Ugandan contracts over budget


SupplyManagement

2 July 2013 | Adam Leach

Lack of attention to detail and poor market research by buyers are to blame for more than 99 out of every 100 public sector contracts in Uganda last year running over budget, according to the Inspector General of Government.

In its third annual report into corruption within government, the IGG found that the number of procurements that kept to budget had dropped to just 0.7 per cent of those let over the past year. It blamed purchasers for leading to unrealistic estimates of overall costs. The situation also appears to be deteriorating as in 2009, only half of contracts were found to have gone over their original budget.

The report said: “Price increase during execution, through change orders in specifications or cost, may be grounds for corruption. This is a significant red flag of a possible entry point of corruption and calls for integration of risk management into public procurement.”

The report, which covered contracts in 2012, also criticised public sector buyers for taking too long. It found that less than a third of procurements – 29 per cent – were completed when they were supposed to.

Analysis: New law fails to ease oil concerns in Uganda


IRIN NEWS

KAMPALA/NAIROBI, 13 December 2012 (IRIN) – Uganda’s parliament recently passed a law to govern the exploration, development and production of the country’s estimated three billion barrels of oil, a resource whose extraction will directly affect the livelihoods of tens of thousands of people.

While the law streamlines the burgeoning industry, analysts have raised concerns over transparency and over who controls the sector.

“The new law helps set clear guidelines under which the oil sector is to be run and managed, and makes clear who is in charge of what roles,” said Tony Otoa, director of Great Lakes Public Affairs (GLPA), a Uganda-based think tank focusing on oil and governance. “However, there are some concerns about transparency and too much power within the oil industry in the hands of the president.”

The bill was passed on 7 December after weeks of wrangling over its controversial Clause 9, which gives the energy minister wide-ranging powers, including authority over the granting and revoking of oil licenses, negotiating and endorsing petroleum agreements, and promoting and sustaining transparency in the petroleum sector. Many members of parliament (MPs) felt these powers should be held by an independent national oil authority.

“Essentially, the standoff, which has ended, was about the withdrawal of trust from a government that is battered by corruption scandals. Also the way the cabinet operates is that, in the past, the feeling has been that some key ministries, like finance, are effectively run by the presidency after being stuffed by yes-men or -women. The pushback against Clause 9 also comes as the Central Bank opened its vaults to a large withdrawal in 2010 [US$740 million to buy six fighter jets] only for approvals to be sought retrospectively,” said Angelo Izama, a Ugandan journalist and oil sector analyst.

“Loss of trust”

“This loss of trust is behind the resistance to greater control by the executive,” he added. “The executive has not been a bad shepherd of the process so far. Uganda’s negotiating position has been tougher with the oil companies, ironically, without the oversight of parliament. However, public scandals elsewhere have negatively affected the ability of the president to convince lawmakers – especially of his party – that he means well.”

A number of donors – including the UK and Ireland – recently suspended aid to Uganda following allegations of deep-rooted corruption in the Office of the Prime Minister. The prime minister, the former energy minister and the foreign affairs minister were all accused of taking kick-backs from oil companies in 2011, charges that remain unproven but that nevertheless damage the reputation of the government.

“The country lacks trust in the state… Institutions and officials have lost legitimacy, and for such an important bill to vest too much power into a political appointee is a recipe for disaster,” said Stephen Oola, a transitional justice and governance analyst at Uganda’s Makerere University Refugee Law Project.

“Granting and revoking licenses and negotiations are technical in nature. We need an independent commission or authority made up of people of good competence, technical ability and experience, and good morals to guard our oil,” said Frank Gashumba, a local businessman and social activist.

Proponents of Clause 9 say licensing powers are safer in the hands of the cabinet than under an oil authority. “The authority is open, easy to bribe and manipulate. Cabinet is bigger than the authority – members of the executive are answerable to Ugandans because they are elected leaders,” said Kenneth Omona, a ruling party MP.

Those opposed to it say they will challenge the law, which was passed with 149 votes in favour and 39 against; some 198 MPs did not turn up to vote.

“The fight is not complete; the passing of the bill is liable to be challenged in courts of law,” said Theodore Ssekikubo, ruling party MP and chair of the parliamentary forum on oil and gas. “If we fail to go to court, we shall subject the matter to a referendum for all Ugandans to pronounce themselves on this strategic resource. We want to ensure transparency and accountability in the oil sector.”

Transparency

There are also concerns about the law’s confidentiality clause, which limits the amount of information accessible by the public.

“The law is lacking transparency – it imposes confidentiality on officials working within the sector, even after they leave office, so there is no opportunity for whistle-blowing or for the public to have access to information on, say, production-sharing agreements,” GLPA’s Otoa said.

He noted that Uganda still hasn’t joined the Extractive Industries Transparency Initiative (EITI), an international scheme that attempts to set a global standard for transparency in oil, gas and mining, further compounding the sector’s lack of transparency. As a member of the EITI, Uganda and oil companies involved in the country would be required to publish all payments and revenues from the industry.

While Total and the China National Offshore Oil Corporation (CNOOC), two of Uganda’s major oil partners, are listed on Wall Street and are therefore subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act – which requires disclosure of payments relating to the acquisition of licenses for exploration and production of oil, gas and minerals – the Irish firm Tullow Oil, another of Uganda’s main oil partners, is not under any similar obligations.

“I am worried we [legislators] and the public can’t access and scrutinize these agreements. You can imagine the recently negotiated and signed oil agreements have not been accessed by the public, not even by members of parliament,” Beatrice Anywar, former shadow energy minister, told IRIN.

The impact of the oil sector has so far been most acutely felt by communities around Lake Albert, thousands of whom have had to move – some willingly and some forcefully – to make room for an oil refinery, which is expected to take up 29sqkm and displace some 8,000 people.

Land issues

“The government is prosecuting the refinery resettlement by the book. However, managing public expectations and the process of multiple decision makers in Uganda’s complex land legal system [Uganda has multiple land systems, including customary, leasehold and freehold] has contributed some volatility to the process… What is adequate compensation? And who determines that? Is it the market or should this be done by the government?” said journalist Izama.

“As a partner to the oil companies, it’s questionable too if the government can make the best decisions for the affected people as it would look to keep project costs fairly low,” he continued. “It is still a dilemma which is jurisprudential as well as political.”

He noted that much of the oil is in game reserves and a sensitive basin with lakes, rivers and a rare biodiversity, and borders the Democratic Republic of Congo, which could also pose challenges for peaceful production; there has already been some tension between the two countries over their boundaries within Lake Albert.

“The process of consensus-building is still weak, and regardless of how it’s arrived at, displacements will create uncomfortable realities, including land and job pressure.”

According to Otoa, Uganda’s lack of a comprehensive land policy makes compensation issues more complex. “We need clear land policies to ensure people are properly compensated – there is a Resettlement Action Plan in place, but it has not been implemented, and a draft land policy has not been actualized, leaving these communities vulnerable,” he said.

He noted that the lack of education among the local population, both in the oil-rich areas and the rest of the country, had contributed to the continued problems in the sector.

“We have focused too much on educating MPs on the implications and importance of good oil governance. We need to move to people-centred approaches and encourage dialogue in the public sphere, which will lead to people demanding accountability from their MPs and the government,” he added.

Ultimately, Izama said, responsible actions by the government will be the difference between Uganda’s oil making a significant impact on the country’s economy or causing conflict and greater poverty.

“Pressure on public institutions prior to commercial oil production is an effective way of counteracting the resource curse. If this public engagement falters, if the transition [from President Museveni to his successor] is volatile, some of the scenarios of the so-called oil curse are possible,” he said. “Overall the tensions are high, but responsible actions by public and political institutions like the past debate show progress is possible.”

EU donors freeze aid to Uganda over corruption


Bloomberg News

KAMPALA, Uganda (AP) — More Western donors are freezing aid to Uganda after a scam in which up to $13 million in donor money was embezzled in the office of Uganda’s prime minister. The aid freeze is the kind of action long demanded by transparency campaigners who charge that the money oils a corrupt system.

Uganda has a reputation as a corrupt country, but the latest scandal — brought to light by the country’s auditor general in October — is remarkable for its details: More than $220,000 was spent on gas in four days, millions of dollars were diverted to buy luxury vehicles for top officials, and millions were deposited into individuals’ private accounts.

Because the money was for the rehabilitation of parts of northern Uganda devastated by decades of warlord Joseph Kony‘s brutal insurgency, the scandal has provoked a lasting rage around the country and inspired aid cuts that foreign donors had been reluctant to inflict on this East African country.

Roberto Ridolfi, the head of the European Union delegation to Uganda, said in a statement late Tuesday that the scandal and those before it amounted to “a breach of trust” on the part of Ugandan authorities. Sweden, Germany, Ireland, Britain and Denmark have already cut or cancelled all aid to Uganda over the scam, saying they have lost faith in the government’s capacity to spend money responsibly.

Western donors fund up to 25 percent of Uganda’s budget.

Ridolfi said the EU and its development partners in Uganda “will withhold pending budget support disbursements and any further commitments for an initial period of up to (six) months.”

The donors are giving Uganda until April to pay back all the lost money, investigate the scandal, and take action against all the suspects. But investigations of this nature, when they happen, rarely produce the intended results in Uganda, where corruption charges are often politicized and then dismissed. This year three ministers with close ties to President Yoweri Museveni who faced corruption charges were set free by a judge who said they were scapegoats. The three politicians swiftly returned to their jobs […]

Some campaigners who had long urged donors to act tougher against official waste and graft say the audacity of the latest scandal vindicates their calls for the dismantling of an often-comfortable relationship between the state and its donors. They want foreign aid to be channeled through non-state actors engaged in service delivery and for donors to work directly with contractors in cases where the authorities cannot be trusted with cash.

“For the first time the donors are coming out and putting clear benchmarks and I think it’s a good move,” said Cissy Kagaba of the Anti-Corruption Coalition of Uganda, a watchdog group. “But there are other alternatives they can use to ensure that the money reaches the intended beneficiaries.” Read the full article here.

Uganda participates in East African procurement forum


The Independent

By Julius Businge

December 5, 2012

The Public Procurement and Disposal of Public Assets (PPDA) Executive Director, Cornelia Sabiiti is leading a team of 19 professionals to a regional procurement forum in Bujumbura, Burundi that runs from Dec. 5 to 7, the procurement body said in a press statement released on Dec. 5.

Over 200 delegates from public, private and civil organisations in the region are attending the 5th East African Procurement Forum being held in Bujumbura.

During the three day conference delegates from Burundi, Kenya, Rwanda, Tanzania, Uganda and South Sudan will deliberate on issues affecting public procurement in the region. The objective of the forum is to serve as a framework that helps participants learn and benchmark with each other on their respective public procurement systems including policies and enforcement measures.

The Ugandan team includes delegates from Civil Aviation Authority (CAA), Uganda Revenue Authority (URA), Uganda National Roads Authority (UNRA), Ministry of Education & Sports, Uganda Management Institute (UMI), Ministry of Health, Kampala Capital City Authority (KCCA), Ministry of Local Government, National Environment Management Authority (NEMA), Uganda Coffee Development Authority (UCDA), Institute of Procurement Professionals of Uganda (IPPU), AH Consulting and the Ministry of Defense.

Uganda will be presenting six papers including a paper on ethics and transparency in the management of public procurement; the contribution of civil society and the public sectors on ethics and transparency in public procurement. Another paper will look at the challenges of an independent regulatory authority.

The Burundi forum comes on the heels of the successful public procurement symposium PPDA held in September 2012 bringing together public and private sector professionals in Uganda.

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