By Charles Kazooba
Uganda has signed a contract granting China's
Sinohydro Group Ltd. a tender to build a large hydropower dam on the Nile River
at a price of $1.65 billion, reviving a project stalled for years by a lack of
money.
Construction of the 600-megawatt Karuma dam
in the east African country is expected to start about two weeks after the
signing of the contract.
China, which provided credit worth $500
million to help pay for construction of the Karuma dam, has rapidly expanded
its investment in infrastructure all over the sub-Saharan Africa.
The project will cost $1.65 billion and will
entail both developing the dam and a transmission line to evacuate the power
from the generation site to the distribution network.
At the signing ceremony, Synohydro was
represented by the company's Chairman, Mr. Zhang Yunli while the government was
represented by the Attorney General, Peter Nyombi and Energy Minister, Irene
Muloni.
Uganda is banking on Karuma to generate
cheap, sufficient power to meet fast-growing energy needs and support an
economy eyeing double-digit growth rates once crude oil production starts as
anticipated in 2017.
The
deal comes after President Museveni held talks with China’s President Xi
Jinping, in Durban, South Africa, during the BRICS (Brazil, Russia, India,
China and South Africa) summit early this year. The two agreed to quickly come
up with a solution for Karuma dam construction, after the procurement process
for a contractor had been mired in endless controversy.
Earlier,
Three Gorges Corporation, which fronted China International Water and Electric
Corporation, appeared to have won the bid to build the Karuma dam. However,
several battles in and out of court ensued, with bidding companies accusing
each other of flouting procurement rules.
In November 2012, High Court judge Eldad
Mwangusya ruled that the bids should be re-evaluated after a successful
application for judicial review by one of the bidders, Salini SpA. The firm
claimed it had been unfairly dropped from the bidding process as the ministry
favoured two firms, CWE (Chinese) and Iran’s Perlite Construction Corporation.
Later on, the Inspector General of Government
also intervened and stopped the award of the contract until all the procurement
rules had been followed. The government now appears to have sidestepped all
this by engaging in a bilateral arrangement with the Chinese government to
expedite the project. Sinohydro will build the dam at a cost of $1.65bn.
kazcharlie@yahoo.com
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