Kampala — Ugandans will now have to wait for at least longer than a whole year before there is any increase in electricity being generated for national grid to ease the biting power shortage.

This follows intervention by the Inspector General of Government who has halted the murky tendering process for the generation of 50 megawatts using heavy fuel oil in a deal worth $300 million.

IGG Justice Faith Mwondha has now written to all concerned saying that she had found enough reason to investigate a move by the Electricity Regulatory Authority (ERA) to award the contract to a Norwegian firm, Jacobsen AS.

The IGG's action comes after weeks of a feud between the three companies that were involved in a bid to supply a thermal power plant by February 2007 capable of generating the 50MW on Mutundwe Hill. Soon after the tender was awarded, the site was curiously changed from Mutundwe to Namanve.

In the middle of the fracas is ERA, which has now been accused of partiality. Dr Frank Sebbowa, the Chief Executive Officer of ERA and his team have been accused of giving Jacobsen an unfair advantage over its closest challenger, Electromaxx. The company, an alliance between Ugandan businessmen and Hyundai Heavy Industries of Korea, has kicked up a storm, accusing Sebbowa's team of falsifying figures. The accusations have attracted the attention of State House and last week, Presidential Legal Assistant Hussein Kashilingi wrote to ERA and the IGG, asking the agencies to sort out the mess.

Justice Mwondha yesterday made a startling revelation that her officers had discovered that contrary to what had been reported in the press and intimated by ERA, no formal award had been made to Jacobsen even if it was negotiating upon being told that it was the most responsive bidder.

It would take 12 months for the plant to start generating power after the tender award contract comes into force. But on top of that, the successful bidder would first have to contend with the National Environmental Management Authority (Nema) which would clear the project in its own time, if satisfied.

Besides Nema, there would also be negotiations with UETCL, the transmission company, over the power purchasing agreement. Realistically, if IGG miraculously sorts out the tender award mess, tonight, it would be another 18 months before there is more power supply. The only other option is to hire another easy-to-set-up Aggreko-like company to use expensive diesel to generate more power.

Losses to the economy arising out of the power shortage are estimated by experts to stand at Shs300 billion this financial year alone.

"I have discovered that there is a prima facie case to warrant investigation," said the IGG on phone on Thursday.

But Sebbowa is sticking firmly behind Jacobsen. " There is nothing irregular about the deal," said the ERA chief in an exclusive interview with Daily Monitor. He said an inter-agency team of experts had found Jacobsen " most compliant" among three bidders which also included American Power Initiative (API).

" Jacobsen are the most experienced of the group compared to Electromaxx, which is made up of Ugandan businessmen with no direct knowledge of running a power facility. If it were you, which one would you choose?" he shot back when pressed on the allegations.

However, Electromaxx said their association with Hyundai, among other things to operate and maintain the power plant, was not the only thing that ERA was ignoring. They claim that they had submitted documents to ERA showing Hyundai's commitment and experience at running power plants and had dispatched an envoy from Korea who made a call at ERA offices. The Korean partners are reportedly flying into Uganda this weekend amid the crisis.

Jacobsen officials could not be reached for comment by press time.

The Hyundai/Uganda alliance also say they were concerned that Jacobsen was approaching their local financier for money signaling that perhaps the company may not have the financial strength despite information from ERA that it was getting a grant from the Norwegian government.

The grant itself could start yet another storm, this time with the Norwegian government itself. It is in dispute whether or not Jacobsen, a European company, may not have breached rules of the Organisation for Economic Cooperation in Europe (OECD) on fair competition.

When board room talks between ERA and Electromaxx collapsed, Dr William Kalema, on behalf of Electromaxx wrote to the IGG asking her to clear the air. His letter, a copy of which Daily Monitor has seen, is copied to President Yoweri Museveni, as well as the Ministry of Finance, the World Bank and the Public Procurement and Disposal of Assets Authority. Dr Kalema says ERA had tinkered with the bid figures and used flawed technical evaluation to arrive at its decision.

"Greater transparency would have allayed bidders' concerns and helped avoid the embarrassment," Kalema wrote.

Uganda's current water and power crisis, while worsened by regional drought conditions, is also a consequence of a failure to finalize the Bujagali dam project, which fell part amid accusations of lack of transparency and bribery. New hydropower projects are not expected until after six years and experts now agree that thermal power, whose procurement has begun with similar controversy, is here to stay.

The move to involve the IGG and petition the President over the transparency of the process brings to mind the jostling for influence, a hallmark of most government procurement deals.

Dr Kalema says his company only learned of the evaluation criteria used to weigh the different bidders in the media. He also alleges that it was through press reports that they realized that ERA had made a blunder of failing to convert Jacobsen bid proposal, which was presented in euros and dollars like the rest of the bidders, making them a better choice.

When asked, Dr Sebbowa denied any wrong doing, saying that his technical team could not fail to detect such a glaring mistake, but offered to cross check.

On March 29, Marcos Bitew, a Director of API, the other disgruntled bidder, also wrote to Dr Sebbowa to complain that they were being kept in the dark.

" To date we as bidders have never received the bid results after the evaluation. We bid for Mutundwe location and were not advised of the relocation to Namanve post bid," Mr Bitew said, adding that API was aware that the World Bank had concerns about the whole process. The relocation of the bid to Namanve is another sore spot since it shows that government went out of its way to make Jacobsen comfortable.

"Government reserves the right to make adjustments in a post bid environment," Dr Sebbowa said in defence of Namanve. He said it was the UETCL that made the decision to accommodate Jacobsen in Namanve but it has since transpired that Jacobsen's technical designs for Mutundwe had been questioned by the World Bank and found wanting, which might explain why the company was irregularly moved to Namanve instead. Electromaxx officials say this is a sign of clear bias.

Information availed to Daily Monitor shows that in its negotiations with UETCL Jacobsen also asked for more land at an additional cost of 1.5 euro ( Shs4 billion) which they expected government to pay but it still did not deter their chances of getting the deal.

Documents also show that while the bid was originally meant for a six-year period after which the plant would be taken over by government, Jacobsen submitted a 12-year repayment bid, information which had not yet come to light. This could have brought down their costs to a level that undercut the other two bidders who had made offers based on a six-year period.

There are murmurs too that Jacobsen is seeking a financial guarantee from government before it can commit itself to a final agreement even if there is no true picture of when they can begin operations once they get the deal. " There is nothing wrong with looking around for money because at the time of bidding we relied on promises and Jacobsen had the best package" Dr Sebbowa said, adding that an investigation would only make things worse for the Ugandan consumer.

It is unclear when the IGG will complete her investigations or whether this will lead to a complete review of the process.