As sleuths continue to probe bribery allegations into the tendering process of the multi-billion Karuma hydropower dam, The Observer has learnt that President Museveni last week ordered Energy and Mineral Development minister Irene Muloni to ensure that the contracts evaluation committee completes its work as soon as possible.
The directive, which the President gave during a meeting with members of Parliament's ad hoc Energy committee at the State Lodge, Nakasero last week, was for the work to be done by Monday, April 2, this week. The meeting was also attended by the Prime Minister Amama Mbabazi and his second deputy, Gen Moses Ali.
Highly placed sources told The Observer that the bidding process for the construction of the 660MW hydropower plant at Karuma has exposed businessmen, technocrats and politicians seeking personal gain by siding with some companies. In August 2010, the Energy ministry invited bids for the construction of the Karuma hydropower dam.
One Iranian and two Chinese firms made it to the pre-qualification round. Salini, which is involved in the construction of Bujagali hydropower dam, Vince in partnership with Group Five of South Africa, as well as Egypt's Orascom, had earlier been eliminated. But this was apparently no squeaky clean process. Allegations of bribery were first reported by The East African newspaper, which alleged that some members of a 12-person bid evaluation committee accepted bribes to allow a bid by a Chinese firm to proceed to the pre-qualification stage despite queries about its ability to execute the works.
The paper claimed the officials received about $1.2m (Shs 2.3bn) from agents of China International Water and Electric Corporation (CWE). The contracts evaluation committee is chaired by Henry Bidasara, a commissioner in the Energy ministry, while the deputy chairperson is John Mugyenzi, general manager of the Uganda Electricity Generation Company Ltd (UEGCL).
We have been told that during the meeting at Nakasero, Museveni ordered that the evaluation should proceed without interference. Although the meeting was initially meant to discuss investigations into the moribund energy sector, the issue of the Karuma dam construction became more pronounced. The President expressed fear that those raising prickly questions regarding the evaluation process might be seeking to throw a spanner in the works.
Museveni said he would not accept any kind of influence peddling or sabotage to affect the Karuma dam project as was the case with Bujagali dam, whose delay in completion has stymied economic growth in the country. The President, who according to our sources appeared quite agitated during the meeting, immediately rang Muloni and instructed her to ensure completion of the evaluation of bids.
If the contracts committee completes the evaluation process, whose results are likely to be announced today, the financial committee will begin evaluating the bids on April 18. The decision by the contracts committee will, however, carry more weight than that of the financial committee. Indeed, a source in the Energy ministry told us that the contracts committee sat on Monday and was expected to announce the best bid anytime soon.
According to other sources, the bribery allegations surfaced early this year when an anonymous letter by a whistle-blower was circulated to the Inspector General of Police, Lt Gen Kale Kayihura and the Public Procurement and Disposal of Public Assets (PPDA) office. When The Observer spoke to the Criminal Investigations Directorate boss, Grace Akullo, this week, she said the police are "trying to find out whether the evaluation committee adhered to the rules of transparency".
Akullo also told us: "Some of the allegations are not worth investigating".
Energy sector rot
Before the Karuma project took centre stage at the meeting, the ad hoc committee, led by Jacob Oboth-Oboth, had briefed the President on the state of the energy sector. Museveni was reportedly told that the original concession agreement between government and electricity distributor, Umeme Limited, had been favourable to the consumer, only to be altered by some corrupt officials in the Energy ministry.
The President was reportedly shocked to learn that changes had been made to the original agreement without consultation with the Attorney General. Another issue that cropped up was the two escrow accounts in Bank of Uganda that Energy officials reportedly closed. There is fear that this could have resulted in financial loss.
An escrow account is a separate bank account for keeping money that belongs to others. The first escrow account was meant to independently audit any losses, which Umeme would claim. Under this arrangement, the Central Bank was only supposed to pay for the losses after an audit carried out by the Auditor General's office.
The second escrow account would be used to monitor how much money Umeme was supposed to invest in the upgrade and maintenance of the power distribution network. Since then, Umeme claims it has invested $132m (about Shs 330bn) in repairing the ailing power distribution network, a claim that cannot be verified since the escrow account was shut.
During the stormy meeting, Museveni was also briefed about how officials at the Energy ministry raised the acceptable limit for power losses from the national grid, which initially was at 28 percent before 2006. It has been at 38 percent from 2006 to date. According to Umeme's computation, one percent loss of power is equivalent to Shs 5bn annually.
Therefore, a 10 percent loss, which represents the increment from 28 to 38 percent, resulted into a Shs 50bn loss annually and Shs 300bn over a six-year spell from 2006 to 2012. During the meeting, Museveni first rang the Attorney General, Peter Nyombi, to find out whether his predecessor, Dr Khiddu Makubuya, had been consulted before these changes were made. Nyombi said he had been asked the same question when he appeared before the ad hoc committee in Parliament.
"I went back to the technical staff and that is when I learnt that the AG's office was not consulted," said Nyombi, whose response was amplified by the phone's loud speaker.
Museveni then rang Fred Kabagambe-Kaliisa, the Permanent Secretary in the Energy ministry, and asked why the escrow accounts were closed. Kabagambe reportedly said the accounts were closed because they were cumbersome to operate, much to the President's chagrin. Museveni reportedly thanked the committee for its meticulous work methods and promised to meet the lawmakers again.