Why government withheld Isimba dam contractor’s final payment

By Jafar Mugera
The government is withholding up to $42.7million (Shs 155.8 billion) meant for China International Water and Electric Company Ltd – the contractors of the Isamba power dam until it has completed the construction of a bridge and access road linking Kayunga and Kamuli districts.

The Ministry of Energy and Mineral Development told Parliament’s Physical Infrastructure Committee that is investigating the disappearance of Shs 24 billion meant for the construction of a road bridge over the dam that, a decision was taken to withhold the payment after an assessment by Uganda National Roads Authority (UNRA) on the progress of the works put the completion level at thirty-five percent.

The contract for the Isimba dam project included two components; the electricity generating plant, and its associated transmission line, plus the construction of a public access bridge connecting Kayunga and Kamuli, and access roads to the project site.

The $567.7 million (Shs 2.4 trillion) Isimba dam construction contract was awarded to China International Water and Electric Company Ltd compensation for its loss of the $1.7 billion (Shs6.2trillion) bid for the construction of the Karuma power dam which was awarded to a rival Chinese company, Sinohydro Corporation Limited.

As they prepared to handover the dam, China International Water and Electric Company Ltd got involved into a litigation battle with a group of people calling themselves the Project Affected Persons (PAPs) that demanded for more than Shs 95.9 billion in compensation for their rock and land at Nakatooke village in Kayunga district which had been taken over by government for the project.

Within months, the figure had grown to Shs 132 billion before they secured an injunction from Mukono High Court to freeze China International Water and Electric Company’s bank accounts, drawing the ire of the Speaker of Parliament, Rebecca Kadaga.

Kadaga took the matter to Parliament in November last year, threatening to name senior government officials who were hiding behind the PAPs to fail the completion of the dam.
The result of Kadaga’s statement was the institution of a Parliamentary investigation.

Appearing before the Parliamentary probe committee, the Ministry of Energy and Minerals claimed that the construction of the bridge atop the power dam was deferred over security concerns.

The government, backed up, surprisingly by Xia Nenghai, the project manager of China International Water and Electrical Company Ltd, claimed that an evaluation of the project revealed that a bridge over the dam posed security and terrorism concerns thus forcing the alteration of the designs.
Nonetheless, Eng Vincent Otim from Uganda Electricity Generation and Company Limited (UEGCL) told the MPs that the government had indicated to the contractor that its full due payment of $42.7 million will not be released until all the works are complete.

Of the $42.7 million, the government has agreed to pay $13.6 million (Shs 49.6 billion) as soon as the contractor presents to government a guarantee that by June-July 2020, the physical progress of the works will have caught up with the level of payment.

Otim told the MPs that the contractor was meant to rectify the defects by on the dam by September 30, 2019, but no progress has been made.
The Chinese contractors badly want the government payments so that they can pay back a $15 million loan they took to finance the construction of the dam.