4 September 2017

Uganda: Why Museveni Fired Isabalija

Photo: Daily Monitor
Stephen Isabalija

Kampala — How pride, Kabagambe's ghost, and Chinese investors sealed his fate

On July 03, the sacked former Permanent Secretary of the Ministry of Energy, Stephen Isabalija swung the first blow in a fight that would live him jobless. He unilaterally cancelled an MoU the government had entered with China Africa Investment and Development Company (CAIDC), which is seen as a major potential funder for President Yoweri Museveni's infrastructure projects.

It was a bold move because the Chinese lobby is the most powerful in Uganda. The Energy Minister, Irene Muloni and Minister of State for Energy, Simon D'Ujanga who ordinarily should have handled the issue, were not impressed. Neither were the Chinese lobbyists. Soon, a report about the implications of the move were on Museveni's desk. Insiders say this report was one of the several the president had received about Isabalija since he appointed him the Energy Ministry PS in November last year.

Back then when Isabalija joined the ministry with the full force of President Museveni, Muloni, D'Ujanga and the technocrats at Amber House were smart enough not to enter a direct fight with him. He was seen as almost untouchable.

As a result, critics say, since being parachuted to the powerful position, Isabalija behaved as if he was a one man army in the ministry. In another fight, he had taken on Muloni and several officials at the Energy Ministry over the US$4 billion oil refinery deal. This is President Museveni's pet project and it also involved Isabalija taking on the Chinese. Oil deals are murky and it is rarely clear which deal is cleaner than the other. So denouncing the Chinese in favour of the Americans might not have been Isabalija's undoing. What is clear is that when he fired Isabalija on Aug. 23, Museveni was terribly disappointed in him. He had pinned a lot of hope for reforming the Ministry in him.

Significantly, Museveni did not even try to sugar-coat the sacking by posting Isabalija to some vague posting anywhere. Instead, the president directed that he should be given a one-month salary in lieu of his termination.

Sector insiders say they are not surprised by Isabalija fumble and fall. He had been appointed in an ad hoc way to a sensitive sector and was kicked out in equal ad hoc fashion.

As if to rub Isabalija's face in the dust of defeat, Museveni appointed former PS Kabagambe Kaliisa's protégé, Robert Kasande, as acting PS. By the time Kaliisa left, he had appointed Kasande as director Petroleum Directorate and the talk around the ministry was that Kaliisa had been grooming him to be his successor. It appears that while Isabalija came with the full force of the president's backing, he forgot that he had some serious heavy lifting to do to win him the hearts that he badly needed to adapt and survive as a new comer at Amber House and in the entire civil service. His first directive on the job did the exact opposite.

Isabalija's problems

When Isabalija arrived at the Energy Ministry head office, Amber House, soon after he was appointed, his first directive might have been anticipated. After all, most new bosses order changes to their new office. But the scale of the remodeling Isabalija ordered raised a few eye-brows.

The Amber House building that Isabalija was moving into is a colonial era building with tiny office cubicles with narrow windows, low ceilings, and poorly lit corridors. He wanted his office bigger and grander.

So it was whispered that the new PS wanted to improve the office to the standards of the one he previously occupied on Level 1, Victoria Towers, Plot 1-13, Jinja Road, as the Vice Chancellor of Victoria University. The expansive office had wide windows with a view of the city's main road and the eye-catching architecture of blocks like Social Security House across the street.

But others read another motive in Isabalija's move.

"If Kaliisa, highly respected across the ministry and highly experienced in everything energy having built the different units from scratch could work in that office," an official at the ministry asked, "who was Isabalija not to?" Isabalija and his predecessor, Kabagambe Kaliisa had fallen out so much that there was no official handover.

They said he wanted to expunge any traces of Kaliisa, whom he was replacing after a bruising tussle. Kaliisa had spent 40 years, half of which he was in top positions at the Energy ministry and had appeared unshakeable. Kaliisa, who was the archetypical geologist, traced it to his family--his grandfather had owned a salt mine-- and on joining the ministry in 1976 after graduating with Honours in Geology and Chemistry from Makerere University, that same year, Kaliisa said he discovered 12 million tonnes of gypsum, a mineral used in the making of cement in Semiliki and three years later, 30 million tonnes of Marble in Moyo District.

His office had for years remained ordinary with the major decorations being rocks of mineral samples--some of which he had discovered and others by the teams of geologist he led.

Over the years, Kaliisa, who would later acquire a Masters of Science in Petroleum Development Geology from Aberdeen University, had led so many teams that not only delivered all the laws and regulations that govern the sector, his teams laid the ground work for almost all energy infrastructure projects in the mining, oil and gas and energy sectors.

Throughout these processes, Kaliisa had groomed most of the officials at the energy ministry, sent them abroad to study, appointed them and promoted them. That Isabalija, a neophyte in the sector ousted Kabagambe was surprising. That he was not succeeded by any of the highly qualified careerists in the ministry was doubly confounding. What was the appointing authority, President Yoweri Museveni, up to?

Isabalija had impressed Museveni as a reformer as he had spent at least the previous 10 months tearing into the bureaucrats and their political heads at Amber House and punching holes into their work methods. It all started with one meeting in March 2016 when Isabalija had an upclose meeting with Museveni for the first time. It was at the presidential lodge in Kyankwazi on the sidelines of the 10--days meeting of the newly elected ruling party legislators.

Isabalija shocked Museveni with a report on shoddy works on the Karuma and Isimba dams. A month later, a furious Museveni fired three top officials overseeing the dams; Paul Mubiru, the director Energy Resources, Henry Bidasala Igaga, the project coordinator, Karuma and Cecilia Menya, the project coordinator, Isimba.

By July, Isabalija had become Museveni's consultant on all energy matters. For instance, in July President Museveni called a meeting to address a crisis over the sale of a stake in the 250 MW Bujagali hydro power dam. Although, all players plus Finance Minister, Matia Kasaija, and URA's Dorothy Akol were present, Museveni halted the meeting because Isabalija was not attending. He immediately asked his private secretary Edith Nakelema to call Isabalija and ask him to come to the meeting right away.

When he arrived, Isabalija did not disappoint. Once again, he dazzled Museveni by exposing information about the deal that the President had not been briefed on by the others. Museveni was shocked and angry. He turned and asked the other officials; "Did you know this?"

There was silence. Kasaijja said he didn't. Kaliisa just looked on sheepishly.

By this time, the tension between Kaliisa and Isabalija had reached uncontrollable levels. After a meeting at State House Entebbe, the two men exchanged words.

"I know you want my job," Kaliisa shouted at Isabalija, "You will not manage."

Just a few months later, Isabalija had managed. Kaliisa became the fourth official at the Energy Ministry to be fired as a result of Isabalija's pushing. By November when Isabalija was appointed PS, he was seen as the most influential official in the energy sector.

However, Isabalija had got rid of Kabagambe, but equally formidable power-centres like Minister Irene Muloni remained. She has spent 15 years at Amber House, seven of them as Minister and formed powerful alliances. Muloni's deputy, Simon D'Ujanga had been there even longer; from 1994 and was Muloni's boss in the defunct Uganda Electricity Board. He has been a minister of State for Energy for 11 years. Both were electrical engineers while Isabalija is an accountant with an MBA. Technically, Isabalija was swimming with sharks. Although he previously headed the board of power generator UEGCL, which is a major player in the sector, he was still being seen as an outsider with very little experience in energy matters and none at all in civil service.

From Nov. 09 when he was appointed, insiders say, Isabalija should have known that his every move would be scrutinised by insiders who saw him as an outsider out to disrupt the status quo. He would be fought. And he would fight back. Who would win? On Aug.23 the verdict was out. Isabalija had lost.

Chinese fight back

Isabalija got himself into trouble in several fights. But two of them appeared to have been his major undoing. In both of them, Isabalija imagined he could defeat the Chinese who are the main investors in Museveni's infrastructure projects and officials at the Energy Ministry led by his boss Eng. Irene Muloni and the powerful commission agents and lobbyists of these Chinese investors.

One of the fights was over the $ 4 billion refinery and the other over the 295MW Kiba dam proposed to be built on the River Nile in Nwoya for US$ 700 million.

On July 03, Isabalija unilaterally cancelled an MoU the government had entered with the powerful China Africa Investment and Development Company (CAIDC).

As a result, Isabalija found himself confronted by the electricity regulator, the Electricity Regulatory Authority (ERA), the Solicitor General, Francis Atooke, acting on behalf of the Attorney General and even President Museveni.

Four days later, Atooke wrote to Isabalija noting that the Attorney General after reviewing the consequences of the termination would cause in terms of compensation for the expenses incurred by CIADC on the project under the MOU, had directed him to write "to you and inform you that a date for a meeting be agreed on next week, to avert the damages government would be exposed to."

As per the MoU, the investor needed to be qualified by the Electricity Regulatory Authority. But When Isabalija was contacted by ERA, he did not respond. The investor wrote to Energy Minister, Muloni complaining. Acting on behalf Muloni, D'Ujang, cleared the investor to get approval from ERA.

Weeks later, ERA in disregard of Isabalija's termination of the MOU, granted CIADC a permit to conduct the feasibility studies for the project. The fight exposed how the top officials at the ministry were working at cross purpose and in the end, most of them appeared to blame Isabalija.

On his part, Isabalija defended his move insisting that that the investor had not delivered on the MoU. "The era of speculators in the energy sector is over," he said.

In another fight, he had taken on and almost all officials at the Energy Ministry over the US$4 billion oil refinery deal. Isabalija and a few others were backing an American consortium against the Chinese. Muloni's camp favoured the deal to go to China's Dongsong Energy, which incidentally also has over the years enjoyed Museveni's backing.

Initially Isabalija's team appeared to have lost the fight as the Chinese consortium ticked all the boxes during a due-diligence process overseen by an inter-ministerial team of 40 experts. But the Dongsong consortium stumbled when a major cog dropped out in a power fight with Dongspong.

Sensing a chink is Dongsong armour, Isabalija on Aug.7 moved to finish it off with an announcement that the government had picked the American consortium for exclusive negotiations.

Almost immediately, the Chinese camp complained about the move and threated to challenge it in what industry experts said could spark of an intense procurement dispute likely to delay what is seen as Uganda's biggest infrastructural project.

Unfortunately for Isabalija, this was the second time a potential investor was raising concerns about his alleged arbitrariness. The ministry and other agencies were still reeling from a fight over the $ 700 million Kiba Hydro Power Project.

Ganging up on Isabalija

That most of the officials involved in these fight had over the years formed a network of the most influential players in government did not help newcomer Isabalija. Early this year, the powerful Secretary to the Treasury, Keith Muhakanizi, in an interview with this reporter said he had immense respect for Kabagambe and described him as "a very smart and hardworking official".

At the time, Muhakanizi and Isabalija were involved in an intense cold war. Muhakanizi accused Isabalija of reporting him at State House for fighting him. Isabalija on the other hand also accused Muhakanizi of fighting him.

The fight between the two officials had been sparked by the appointment of Isabalija's successor. Muhakanizi wanted the job to go to Frank Katusiime and Isabalija favoured Eng. Proscovia Njuki, a former fellow board member. In the end, Isabalija's camp won and Njuki was appointed the power generator's board chairperson. But the fight had escalated and sucked in UEGCL. Muhakanizi, who had received a dossier from a whistle blower detailing excesses at UEGCL under Isabalija's leadership launched an investigation by auditors at his office to look into these allegations. The auditors were not successful and one of them told this reporter that the power generator blocked it.

The bad blood between the two officials would later escalate into another fight at the Rural Electrification Agency. Both Muhakanizi and Isabalija are board members there. Sources intimated to The Independent that Muhakanizi had severally opposed some of the directives of Isabalija at the agency.

In the end, Isabalija found himself alone and exposed. He was accused of lacking practical management skills, which is ironical given that he is a management expert. With a Masters of Business Administration from Makerere University and a PhD in management in Public Policy from Southern University in New Orleans, United States, Isabalija made his bones teaching management at top universities and institutes in Uganda.

Critics felt that knowing his handicap--limited knowledge about the inner workings of the sector and Uganda's civil service--Isabalija needed to first learn, establish critical alliances before embarking on his reforms. Sector observers say Isabalija's firing marks a triumph of the status quo at the Ministry of Energy. It is a set up that Museveni might not be too excited about. There are also fears that the new era of uncertainty ushered in by Isabalija's sacking might have a chilling effect on the ability of Amber House technocrats to make independent decisions, which could be a major concern for investors. A lot now hangs on how Kasande manages in the interim and who Museveni finally choses to appoint as PS. Already, apart from Kasande's a few other names are doing the rounds



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