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Yoweri Museveni

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.

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: Museveni’s hand makes graft fight a harder task


The Observer, Uganda

By Hussein Bogere

April 22, 2012

When MPs this week release their report on the troubled national identity cards project, one name that will feature prominently is that of President Yoweri Museveni.

The report, by Parliament’s committee on Defence and Internal Affairs, will include claims by government officials that Mr Museveni instructed them to award the IDs contract to a German company, Muhlbauer High Tech, without following standard procedures. The project, worth about Shs 219bn, has since stalled amid accusations that some government officials are frustrating Muhlbauer.

This is the latest government procurement contract to degenerate into a scandal about management of taxpayers’ money. It all begs the question why the government can hardly execute major contracts without flouting procedures, corruption and loss of public funds.

In his latest report, the Auditor General (AG), John Muwanga, reveals that taxpayers have lost more than Shs 1,000 billion in just 12 months to fraud in various forms and at various levels.

While many people blame this on the culture of greed, our analysis shows that State House regularly comes up in cases of massive loss of public funds. In fact, President Museveni stands accused not just of handling high-level fraud with kid gloves, but also of giving directives that tend to torpedo financial oversight mechanisms.

Botched Deals

Only recently, businessman Hassan Basajjabalaba was in the news for receiving Shs 142bn in compensation after his Haba group lost contracts to operate some city markets and the Constitution Square. Both directives – to cancel the contracts and to compensate Basajjabalaba – came from State House. While the President has since dissociated himself from the figure of Shs 142bn, and two of his ministers resigned over the saga, this matter has left State House’s reputation in tatters.

Early this year, Parliament’s Public Accounts Committee (PAC) heard that government lost Shs 40bn to a ghost company, Dura Cement, after President Museveni cancelled its contract to produce cement at Dura in Kamwenge district. While meeting PAC, Museveni said he could not recall the person who advised him to cancel the contract.

But following that advice from that forgettable individual, Museveni wrote a letter to the then minister of Energy and Mineral Development Daudi Migereko, instructing him to terminate the lease after considering mutually agreed terms. But the history of troubled contracts has not just started.

In 2001, the Ugandan government got excited after signing the Africa Growth and Opportunities Act (AGOA) that would see it export to the United States market, among other products, fabrics, tax free. The government guaranteed bank loans for the hand-picked Sri-Lankan-owned company Apparels Tri-Star in the hope that it would lead to increased revenue from garment exports, create jobs, and revive Uganda’s cotton industry. It didn’t take long for the textile machines to go silent, and government to lose nearly Shs 33bn after dfcu and Uganda Development Bank seized securities that had been guaranteed through bank of UgandaRead more.

Uganda: Parliament irrationality and oil contracts


The Independent

BY DENIS MUSINGUZI

March 11, 2012

It is painfully clear the problem is not lack of laws and policy frameworks but lack of implementation efficiency.

The signing of the PSAs on February 3, 2012 by Tullow, CNOOC, Total and government despite standing court cases and resolution by parliament slapping any oil transactions until comprehensive legislation is made, has attracted a lot of uproar. At the height of it has been the parliament which accuses the government of contempt of parliament, and a host of other civil society organizations, both of which have threatened to petition Ugandans, including pregnant mothers in hospitals contesting against the agreement.

Their agitation sounds credible at first since the discovery of 2.5 billion barrels of oil in the Albertine region in western Uganda holds potential for significant economic transformation for Uganda. Estimated at $74 per barrel, it means the oil is worth $148 billion, the money believed to be enough to run the present national budget for about 42 years without donor funding. This certainly turns the oil management into a hotspot; poor governance of the oil wealth is globally known to evoke a curse.

On the second thought however, Andrew Mwenda has provokingly presented the argument, that by blocking the signing of oil contracts the 9th Parliament will not improve but rather worsen the nascent sector, in such a profound manner that makes one to deeply rethink parliament’s posturing at fighting corruption. It should be recalled that parliament made the resolution following bribery allegations based on unfounded documents. Incidentally, Mwenda’s candid criticism of parliament comes at a time when public faith in the 9th Parliament has been greatly reduced by their unanimous and shameless acceptance of Shs 103 million each, to purchase sleek cars.

The acceptance of the money in the name of performing their “public” role, with utter disregard of the needy civil servants such as doctors and teachers who even do not enjoy a small portion of the hefty benefits and privileges enjoyed by parliamentarians makes one doubt their resolve at fighting corruption. The possibility that parliamentarians are fighting to leverage their personal and not public benefit is evident; the likelihood of them being purchased is clearly high. It is helpful to recall that the majority Constituent Assembly delegates who provided constitutional term limits are the same who lifted them, barely ten years later, at a shameful price of Shs 5 million, without any substantive justification.

What makes one even all the more suspicious is that the MPs’  posturing is not about the merits and demerits of the PSAs, but more insignificantly about making enabling legislation for leveraging public benefits from oil. I say insignificantly because any keen Ugandan is painfully aware that Uganda’s problem is not lack of relevant laws or required policy frameworks, but lack of implementation efficiency in the delivery of public goods and services, which parliamentarians are quiet about. Uganda has in fact become a cemetery of dead laws, dusted in law books, never in reality, but scarcely applied, if not selectively…Read more.

Uganda: Can MPs improve oil contracts?


The Independent

By Andrew M. Mwenda

February 17, 2012

We should be suspicious of parliamentary interventions in lucrative government contracts because they often make a bad situation worse.

Recently, President Yoweri Museveni ordered government of Uganda officials to sign oil Production Sharing Agreements with companies. This was in spite of a resolution by parliament stopping all new agreements. Many Ugandans are rightfully sick and tired of corruption and genuinely suspicious of the executive. They support parliament in its self-proclaimed fight against the problem. Yet I am much more inclined to side with Museveni on signing PSAs.

The signing of oil agreements is important as a signal that investment in the sector can begin. This allows companies interested in investing in downstream and upstream activities feeding into and from the industry to bring in money. For many countries, this leads to increased employment and economic growth. In Ghana, upon signing the agreements, economic growth was 20 percent that year. In Equatorial Guinea, it was 30 percent. The challenge for Uganda actually is to examine the benefits against the costs of delaying these contracts through protracted parliamentary investigations.

I have been a journalist in Uganda for almost 18 years now; my first major story was published in The Monitor in January 1994 when I was a first year student at Makerere University. This has been a fulfilling practical craft given my love of storytelling. It has also been an intellectual journey; my interest in the complexity of social phenomenon has taught me to reflect. So I see a mismatch between the theory of democracy as presented in textbooks and the reality of its outplay in the politics I cover as a journalist.

For instance, democratic theory teaches us that when exercising its functions, parliament seeks to hold the executive to account. It seems theoretically obvious that in passing a resolution suspending signing oil contracts, the House was trying to check any abuses the executive could have made. Yet from my experience, such democratic contestations are often driven by more complex motivations. Even when well-intentioned, they often produce results at odds with the proclaimed purpose. In the case of most government contracts I have covered, these contests undermine the state’s ability to negotiate better deals for the country.

Many Ugandans genuinely believe this parliamentary intervention will stop the corruption of the executive in oil contracts. This faith is largely because many people want to have hope in the destiny of Uganda. Yet my experience shows parliamentary intervention is more likely to make the situation worse. The oil barons who come to Uganda are not fools. They have worked in many other African countries and beyond. They know that Uganda’s 9th parliament is not simply made of selfless MPs tirelessly fighting for the public good. They also know that even when MPs feel for their country – and many do – they also have personal interests…Read more.

Oil confidentiality arguments flawed


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The Observer

By Deus Mukalazi

October 23, 2011 23:01

The last few weeks have been characterised by running battles between the Executive and the Legislature over confidentiality of the oil contracts signed between the Government of Uganda and the oil companies.

This climaxed in the two-day heated oil debate where Parliament resolved that government desists from signing agreements with confidentiality clauses. Attempts were made by the executive to argue the case for confidentiality, citing commercial sensitivity of certain information in the contracts and confidentiality being the norm all over the world, as well as security reasons.

The MP for Ruhaama Janet Museveni even reasoned that Uganda could have her oil fields bombed if there was no confidentiality! The one million dollar question is: are oil contracts really that sacred that they can’t be shared?

While treaties, laws, regulations, and other legal documents defining the relationship between governments and private companies are public documents, oil, gas and mining contracts between governments and the extractive industries are usually shrouded in secrecy. In Uganda, these have been unavailable to citizens and it took frantic efforts for the signed production sharing agreements to be availed to Parliament and even then the content of these contracts was not to be shared outside Parliament.

There is a growing international call to make the terms of extractive industry contracts available to the public, and to establish new norms for what information is and is not disclosed in deals between government and industry. Proponents of transparency argue that the secrecy surrounding oil transactions in Uganda and government’s reluctance to share the oil contracts might be a precursor to the ‘oil curse.’

The oil curse is a popular reference to a situation of poverty, low economic growth, corruption and civil strife that has come to characterize natural resource rich countries in Africa like Liberia, Nigeria, DRC, Angola, etc.  Contract transparency is essential for the responsible management of natural resources and the potential for growth and economic development that those resources can provide.

The government, citizens and investors, all have to gain from contract transparency. Citizens’ suspicions of the hidden clauses will decrease, creating a more stable contract that is less likely to be subject to calls for renegotiation and better relationships with communities. It also allows citizens to monitor contracts in areas where they may be better placed than the government to do so, such as environmental compliance and the fulfillment of social commitments.

Contract transparency provides incentives to improve on the quality of contracting because government officials will be deterred from seeking their own interests above the population’s, and with time, government’s bargaining power would increase. There are already claims that the contract terms between the government and the oil companies were not consistent with international norms.

Secrecy only helps to fuel such speculation and hides incompetence, mismanagement and corruption. Ugandans have a right to know how their government is selling their resources. In Uganda, sub-soil resources such as minerals, oil, and gas are the property of the nation, not the individual owner of the surface rights.

Accordingly, contracts involving oil, gas and other mineral resources may cover a range of information to which citizens should rightly have access to, as owners of such resources. Contracts typically contain information about fiscal terms and the allocation of risk that are essential to understanding the benefits and risks – the real value of the deal.

Public contracts are essentially the law of a public resource, and the basic tenet of the rule of law requires that laws are publicly available. The size and scope of many extractive projects is so large that they directly affect the livelihoods of large populations for decades.

Where contracts create their own laws – because they modify existing laws, freeze their application or elaborate on outdated or incomplete laws – it’s all the more important to disclose their contents for democratic accountability.

Following several high-profile reports on contracts, national debates in a number of countries and campaigns by international organizations, Ugandans are increasingly aware of the critical role of contracts and some of their worst excesses.

Ugandans are also aware of the infrastructural development and benefits that transparency in managing diamonds has brought in Botswana.
So, in the face of mounting calls for transparency, those who fail to disclose, or to provide a plausible explanation for non-disclosure, are seen to have something to hide.

The author is coordinator, Publish What You Pay Uganda.
deusmukalazi@gmail.com

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