Wednesday 26 May 2010
Freedom of press under attack in Uganda
A new bill tabled before parliament threatens the freedom of the press in Uganda. The country's journalists need the world to speak out against it.
Adopted from the Guardian.co.uk
Like many soldiers who seized power with the gun, promising clean leadership in post-colonial Africa, the Ugandan president, Yoweri Museveni, has had problems putting earlier patriotic rhetoric into action.
In the early years, after his National Resistance Army captured Kampala in 1986, Museveni sounded too good to be true. He promised a fundamental change to the way the country was governed, not a mere change of guard. He wondered why an African president would fly in a private jet when his people were suffering. He abhorred corruption. He said Africa's problem was leaders who did not want to leave power.
It now seems Museveni was too good to be true. Over the last decade, some of the actions of his government have been compared to those from the days of bare-knuckled dictators, like his predecessor Idi Amin – actions such as open persecution of political opponents, torture by army intelligence and military desecration of the high court. Today Museveni flies in a $50m presidential jet, which last year replaced an older one that was once used to fly his daughter to Germany to have a baby. All this, while a third of his people survive on barely $1 a day. Corruption is now making a strong case to be appended on to the name Uganda. And next year Museveni will seek to extend his reign to 30 years, having erased presidential term-limits from the country's constitution.
Press freedoms
One of the reasons why Museveni was originally labelled one of a new breed of African leaders was because of media freedoms. Magazines and newspapers thrived under the new "visionary" leader and broadcast media were liberalised, leading to the creation, over the years, of more than 150 private radio and television stations.
There have always been cracks in this relationship between state and the fourth estate, but they have become ever more glaring over the last 10 years, characterised by harassment of journalists critical of the government and the closure of media houses. In Uganda today, radio stations, especially those upcountry, in more rural areas where most Ugandans live, are considered very brave to host senior opposition figures, like Kizza Besigye of the Forum for Democratic Change. Some stations have denied him paid-for airtime, citing "orders from above" or for fear of being blacklisted by the Intelligence and the Broadcasting Council.
But the latest assault on the media, which has sent chills down the spines of independent newspaper editors, is the press and journalists (amendment) bill 2010. Reports indicate it has been tabled in Cabinet, although a minister recently said it is yet to be discussed.
One of the provisions in the proposed law requires newspapers to apply for annual licences to operate from the Media Council, whose chairman will be appointed by the minister for information. Until now newspapers only had to register with the General Post Office and pay for a trading licence like any other business. As Dr George Lugalambi, head of the mass communication department at Makerere University and chairman of the media activist group Article 29 Coalition, put it in a recent statement, by bringing this clause, the government is giving itself powers to legally shut down newspapers by simply revoking or refusing to renew its licence.
"Contrary to the provisions of Article 29 of our Constitution, licensing of newspapers will amount to licensing the very fundamental freedom of expression that is guaranteed in the constitution," the statement said. "Licensing of newspapers is an archaic control mechanism which has been used by regimes that do not appreciate the role of the media in enhancing the public good."
A newspaper could also lose its licence if it published material that the Media Council deems to be harmful to national security, stability, unity, the relationship with friendly countries or material that amounts to "economic sabotage". Given the contested nature of what constitutes "national interest" in a country where leaders live in politically financed extravagance while children die of malaria, and where top army ranks appear reserved for those from the president's ethnic group, the criminalisation of critical reporting on such public issues is, clearly, a veiled attack on freedom of expression.
The Article 29 Coalition, which has previously engaged Uganda's information minister, Kabakumba Masiko, over these matters, calls for support of the media's efforts at self-regulation, including the formation of an Independent Media Council. But a close scrutiny of government actions and statements against independent media houses shows ministers are not interested in professionalising the media, rather in controlling it.
Controlling opinion
In a recent interview with the Daily Monitor newspaper, Masiko said the law was needed to enforce responsibility in the media and control media that incite people. Asked who defines national interest, the minister replied "us Ugandans". And how do the media commit the crime of economic sabotage? By reporting about corruption scandals and environmental concerns on a contentious new electricity dam.
But last October, while speaking in the western Ugandan town of Hoima, Masiko inadvertently gave away what she, and the bill, really meant by saying that her government would not tolerate media and clergy that incite people. "All media content falls under my mandate, therefore make sure that your content promotes government programmes," she said at a Catholic church-founded radio station. "Stick to your mission and vision and do not incite the public against their government and leaders. Religious leaders, reserve your political comments and sentiments; if you make a political statement, be prepared for the consequences. Leave politics to politicians, or be ready to bear the consequences."
So there it is. Don't be critical, or expect "consequences" from the government; make sure that religious leaders – more than 90% of Ugandans profess to being practising Christians or Muslims - do not talk politics unless they are praising the government. That way you can rule without any significant interruption. That is how you get a Mugabe-style regime.
The Swedish government and US secretary of state Hilary Clinton are among the latest diplomats to speak out against Museveni's attempts to muzzle the press. Indeed, Clinton's latest report on Uganda was remarkably terse in its language, an indication of the west's changing tone towards Uganda's new breed leader. But how much can the west do to move a man they have so long helped to entrench himself in power? And what stance will the UK's new government take on the issue?
The world's outrage over Uganda's anti-gay bill looks like it has had an impact. It has not been thrown out yet, but could be quietly dropped. Perhaps too, with concerted pressure – especially from the EU countries and US – we can get Museveni to back down on this draconian bill. We have to try.
Wednesday 7 April 2010
Should Uganda adopt the Italy-Vatican system to solve its problems?
Bishop Cyprian Lwanga of Rubaga has suggested that Uganda adopt the Italy- Vatican system of governance as a solution to the current deadlock between the Central Government and Buganda.
The Vatican is an autonomous State, with among others, a formidable security detail/army, its own financial system and a strong football team, which plays in the Italian league, the Pope actually gets tickets for a full season.
Attending the Easter mass celebrations was Vice President Gilbert Bukenya and Buganda prime minister John Baptist Walusiimbe. However, none of the two leaders commented on the suggestion. Bukenya vaguely said government was open to dialogue with Buganda and Walusiimbe thanked all those who contributed to the rebuilding of the Kasubi tombs.
Now, the Vatican wields a lot of power and it is a threat to the existence of any government, especially those whose popularity is hinge on military power.
The Baganda, are the largest tribe in Uganda that lives in the central region. They form one of Uganda’s largest Kingdoms, ruled by a king called the Kabaka. The Kabaka wiled both political and economic power, till 1966, when the government then, led by late ex-President Milton Obote, abolished kingdoms.
President Museveni restored kingdoms in 1993; however, according to the 1995 constitution he is only a cultural head. And time and again, the central government has reminded it of that role. Government pays cultural leaders a monthly upkeep of sh5million, including availing a 4*4 vehicle and a military escort.
The King however, through his loyal subjects has however continued to demand more; they want a federal system of government, a return of its property, including claims on 9000sq miles of land.
So, is this a workable solution to the problem that has existed since Uganda became a State?
I sincerely do not see a straight solution in hand, but to suggest an autonomous Buganda within Uganda is suggesting what all previous and current governments have vehemently rejected.
At the moment, I believe the confrontation between Central government and Mengo establishment will stay or probably get worst as Uganda heads toward the 2011 election. President Yoweri Museveni and team will not take chances with the Kingdom. He would not want a kingdom that can challenge his power, either through its radio, that has been closed since last September or any other power source.
For Buganda to regain its power or get heard, it must adopt a non confrontational approach, for anything that threatens the political hold by the regime will not be listened to or tolerated.
Buganda must also drop the victim mentality and learn to trust and involve other regions in their fight for ‘federo’ an adulterate formed of federal system of governance.
For now, the lone player system won’t take it far and a suggestion of Italy-Vatican system of governance will add more fuel to flame.
The Vatican is an autonomous State, with among others, a formidable security detail/army, its own financial system and a strong football team, which plays in the Italian league, the Pope actually gets tickets for a full season.
Attending the Easter mass celebrations was Vice President Gilbert Bukenya and Buganda prime minister John Baptist Walusiimbe. However, none of the two leaders commented on the suggestion. Bukenya vaguely said government was open to dialogue with Buganda and Walusiimbe thanked all those who contributed to the rebuilding of the Kasubi tombs.
Now, the Vatican wields a lot of power and it is a threat to the existence of any government, especially those whose popularity is hinge on military power.
The Baganda, are the largest tribe in Uganda that lives in the central region. They form one of Uganda’s largest Kingdoms, ruled by a king called the Kabaka. The Kabaka wiled both political and economic power, till 1966, when the government then, led by late ex-President Milton Obote, abolished kingdoms.
President Museveni restored kingdoms in 1993; however, according to the 1995 constitution he is only a cultural head. And time and again, the central government has reminded it of that role. Government pays cultural leaders a monthly upkeep of sh5million, including availing a 4*4 vehicle and a military escort.
The King however, through his loyal subjects has however continued to demand more; they want a federal system of government, a return of its property, including claims on 9000sq miles of land.
So, is this a workable solution to the problem that has existed since Uganda became a State?
I sincerely do not see a straight solution in hand, but to suggest an autonomous Buganda within Uganda is suggesting what all previous and current governments have vehemently rejected.
At the moment, I believe the confrontation between Central government and Mengo establishment will stay or probably get worst as Uganda heads toward the 2011 election. President Yoweri Museveni and team will not take chances with the Kingdom. He would not want a kingdom that can challenge his power, either through its radio, that has been closed since last September or any other power source.
For Buganda to regain its power or get heard, it must adopt a non confrontational approach, for anything that threatens the political hold by the regime will not be listened to or tolerated.
Buganda must also drop the victim mentality and learn to trust and involve other regions in their fight for ‘federo’ an adulterate formed of federal system of governance.
For now, the lone player system won’t take it far and a suggestion of Italy-Vatican system of governance will add more fuel to flame.
Tuesday 9 February 2010
Tax row threatens Bujagali power project
A tax row is threatening to delay the Bujagali hydropower project, seen as crucial in solving the acute power shortage in the country.
The Uganda Revenue Authority (URA) has defied a directive from the finance ministry to halt VAT charges against the project’s supplier and sub-contractors. It also refuses to refund money it took from the supplier’s account over tax defaults.
In February this year, URA froze the accounts of Bavima Enterprises, the project’s main supplier, demanding VAT arrears totalling sh358m. It also forcefully took sh17m from the company’s account in Crane Bank.
In addition, the tax body is demanding sh331m from three sub-contractors, Boschcon, Cilmerics and Pitchbuild.
The suppliers and sub-contractors have cried foul, saying the move had put their companies in great financial hardship.
Boschcon has declared bankruptcy while the management of Cilmerics is on the run from angry workers.
Employees of both companies have complained to the energy minister and the World Bank, the chief financier of the $860m (sh1.9 trillion) project, about non-payment of salaries. They are demanding sh3.2b in salary arrears and have threatened to go on strike over the issue.
When contacted, Boschcon management confirmed that it owed its workers money and blamed the Government for refusal to refund their VAT.
The URA clamp-down has triggered a chain reaction, with the sub-contractors trying to pass the taxes onto Salini Construttori, the main contractor of the 250MW power project. But Salini has soundly rejected the bills and instead has passed them on to Bujagali Energy Limited (BEL), the project developer.
PriceWaterhouseCoopers, a reputable audit bureau, has warned that the move will not only cause delay but also increase the project cost by $9.6m (sh21b).
The tax squabbles started in May 2007 when the suppliers and sub-contractors invoiced Salini for deliveries and work completed, inclusive of VAT.
But Salini rejected the rates, saying it was VAT exempt. It referred the companies to the finance ministry and URA for a VAT refund.
A series of meetings were held with officials from the ministry, URA and the Bujagali developer but the issue was not sorted out. The dispute, which former finance minister Ezra Suruma left pending, has reached the desk of his successor, Syda Bbumba.
The Solicitor General in a letter of February 11, 2009, advised the permanent secretary of the finance ministry, Chris Kassami, that the sub-contractors were entitled to VAT refund under the VAT (Amendment) Act 2008.
Consequently, Bumba in a letter two weeks later asked URA boss Allen Kagina to halt any enforcement measures against the sub-contractors pending a Cabinet decision.
Last month, Keith Muhakanizi, the deputy secretary to the treasury, also wrote to Kagina requesting that the VAT arrears of the companies in question be re-assessed with a view to keeping the cost of the project low.
“I would be grateful if you verified these claims and provided a way forward on how to resolve them without further impediment to the project implementation,” Muhakanizi said in the April 28 letter.
But Moses Kajubi, the URA commissioner for domestic taxes, said the claims by the four companies were illegal and refunding the money would be against the law.
“According to the VAT (Amendment) Act 2008, the VAT on input goods and services by Bujagali sub-contractors is not refundable,” Kajubi told The New Vision.
“We implement the law as it is. If I withdraw money from the URA coffers to refund the sub-contractors, I would have paid illegally.”
URA spokesperson Sarah Birungi Banage also disclosed that some of the arrears being demanded from the four companies were for supplies made outside the Bujagali project.
“They trade with a cross-section of clients across Uganda and definitely their business transactions, other than those with Bujagali project, are subject to taxation,” Birungi said.
“This explains the tax assessments URA raised on them. When they did not co-operate in paying up, we froze some of their accounts. But they made the necessary arrangements to pay so the accounts were later opened.”
Salini warns that the impact of VAT will increase the sub-contractors’ costs and make it difficult for them to fulfill their contract obligations. “Both Salini and BEL are of the view that if the status quo continues, it will be difficult to complete the project within the set budget,” a Salini official said.
In addition, Salini fears that a number of suppliers and sub-contractors may not be willing to continue dealing with them due to the squabbles with URA. One of the conditions by the project financier was that local companies supply some of the construction materials.
However, Salini said, it is now considering contracting foreign companies to perform these tasks.
The Uganda Revenue Authority (URA) has defied a directive from the finance ministry to halt VAT charges against the project’s supplier and sub-contractors. It also refuses to refund money it took from the supplier’s account over tax defaults.
In February this year, URA froze the accounts of Bavima Enterprises, the project’s main supplier, demanding VAT arrears totalling sh358m. It also forcefully took sh17m from the company’s account in Crane Bank.
In addition, the tax body is demanding sh331m from three sub-contractors, Boschcon, Cilmerics and Pitchbuild.
The suppliers and sub-contractors have cried foul, saying the move had put their companies in great financial hardship.
Boschcon has declared bankruptcy while the management of Cilmerics is on the run from angry workers.
Employees of both companies have complained to the energy minister and the World Bank, the chief financier of the $860m (sh1.9 trillion) project, about non-payment of salaries. They are demanding sh3.2b in salary arrears and have threatened to go on strike over the issue.
When contacted, Boschcon management confirmed that it owed its workers money and blamed the Government for refusal to refund their VAT.
The URA clamp-down has triggered a chain reaction, with the sub-contractors trying to pass the taxes onto Salini Construttori, the main contractor of the 250MW power project. But Salini has soundly rejected the bills and instead has passed them on to Bujagali Energy Limited (BEL), the project developer.
PriceWaterhouseCoopers, a reputable audit bureau, has warned that the move will not only cause delay but also increase the project cost by $9.6m (sh21b).
The tax squabbles started in May 2007 when the suppliers and sub-contractors invoiced Salini for deliveries and work completed, inclusive of VAT.
But Salini rejected the rates, saying it was VAT exempt. It referred the companies to the finance ministry and URA for a VAT refund.
A series of meetings were held with officials from the ministry, URA and the Bujagali developer but the issue was not sorted out. The dispute, which former finance minister Ezra Suruma left pending, has reached the desk of his successor, Syda Bbumba.
The Solicitor General in a letter of February 11, 2009, advised the permanent secretary of the finance ministry, Chris Kassami, that the sub-contractors were entitled to VAT refund under the VAT (Amendment) Act 2008.
Consequently, Bumba in a letter two weeks later asked URA boss Allen Kagina to halt any enforcement measures against the sub-contractors pending a Cabinet decision.
Last month, Keith Muhakanizi, the deputy secretary to the treasury, also wrote to Kagina requesting that the VAT arrears of the companies in question be re-assessed with a view to keeping the cost of the project low.
“I would be grateful if you verified these claims and provided a way forward on how to resolve them without further impediment to the project implementation,” Muhakanizi said in the April 28 letter.
But Moses Kajubi, the URA commissioner for domestic taxes, said the claims by the four companies were illegal and refunding the money would be against the law.
“According to the VAT (Amendment) Act 2008, the VAT on input goods and services by Bujagali sub-contractors is not refundable,” Kajubi told The New Vision.
“We implement the law as it is. If I withdraw money from the URA coffers to refund the sub-contractors, I would have paid illegally.”
URA spokesperson Sarah Birungi Banage also disclosed that some of the arrears being demanded from the four companies were for supplies made outside the Bujagali project.
“They trade with a cross-section of clients across Uganda and definitely their business transactions, other than those with Bujagali project, are subject to taxation,” Birungi said.
“This explains the tax assessments URA raised on them. When they did not co-operate in paying up, we froze some of their accounts. But they made the necessary arrangements to pay so the accounts were later opened.”
Salini warns that the impact of VAT will increase the sub-contractors’ costs and make it difficult for them to fulfill their contract obligations. “Both Salini and BEL are of the view that if the status quo continues, it will be difficult to complete the project within the set budget,” a Salini official said.
In addition, Salini fears that a number of suppliers and sub-contractors may not be willing to continue dealing with them due to the squabbles with URA. One of the conditions by the project financier was that local companies supply some of the construction materials.
However, Salini said, it is now considering contracting foreign companies to perform these tasks.
Uganda: Kenlloyd-Logistics Loses Fuel Deal
THE Uganda Procurement Authority has directed the energy ministry to re-tender the procurement of fuel to restock the Government's oil reserves in Jinja.
The Public Procurement (PPDA) and Disposal of Assets Authority and Parliament halted the murky sh45b deal awarded to a local company Kenlloyd-Logistics (U) Ltd early this month, citing several flaws in the procurement process.
Kenlloyd-Logistics was awarded the contract to restock the Government's strategic oil reserves in January. The company, registered in 1997, deals in logistics and commodities and only started dealing in petroleum in 2003, but beat big oil companies to clinch the deal.
The probe report says there was no evidence of the post-qualification to ascertain the capacity of Kenlloyd-Logistics. Which created uncertainty about the implementation of the contract. "The authority recommends that the accounting officer re-tenders the procurement for the fuel for the Government reserves to mitigate risk and ensure sustainability of the supplies," the report read.
The report calls for disciplinary action against the Commissioner Petroleum Supplies Department, Ben Twodo, for flouting the provisions of the PPDA Act and usurping the powers of the accounting officer and the contracts committee.The report also wants the members of the contracts committee cautioned for failure to correct the anomaly caused by the commissioner. The procurement authority has also cancelled the waiver granted to the energy ministry to use the restricted domestic bidding method, saying the ministry abused the waiver.
PPDA said the energy ministry sought for a waiver from the authority to use the domestic restricted bidding method after the procurement process had commenced. "The authority treats this as a fraudulent practice as defined under the PPDA Act, 2003. PPDA therefore revokes the waiver granted to the entity to use the restricted domestic bidding method in this tender since it does not grant retrospective approvals," the report further read.
The report noted that the procurement method used was not approved by the contracts committee contrary to Section 79 (2) of the PPDA Act, which states that the choice of the procurement or disposal method shall first be approved by the contracts committee.
During the investigation, the chairman of the contracts committee, Ernest Rubondo, said his committee had noted the inadequacy of the bidding document which lacked vital information, but had resolved that considering the fuel crisis at hand, the ministry should proceed with the procurement.
The contracts committee and procurement and disposal unit only got involved after invitation of bids. Given that the estimated value of the supplies exceeded about sh50m the open bidding method of procurement should have been used. However, the energy ministry did not apply to the PPDA for a deviation. It also stated that Twodo issued an invitation to bid, on behalf of the Permanent Secretary (PS), without the prior approval of the then acting PS William Luwemba Apuuli, contrary to the PPDA Act.
According to the report, the petroleum supplies department played the role of the accounting officer, contracts committee and procurement and disposal unit and therefore the invitation to bid issued to bidders was irregular in law. The PPDA report said other bidders were treated unfairly when the ministry allowed Kenlloyd-Logistics to have the backing of a third party - Vitol Group.
On January 23, Vitol Group communicated to the Accounting Officer, Ministry of Energy, confirming their intention to supply oil products to Kenlloyd-Logistics for the volumes tendered out by the ministry. "It should be noted that post-qualification in respect of ascertaining capacity of the supplier should go further than sending mails," the report said.
The investigation established that there was no post-qualification conducted to ascertain the capacity of Kenlloyd-Logistic which creates uncertainty about the implementation of the contract. PPDA points out that the ministry also ignored the concerns and directives of the ministerial sub-committee on economy and went ahead, negotiated and awarded the contract to Kenlloyd-Logistics.
In a January 31 memo to the PS, the ministerial sub-committee was disappointed over the award to only one supplier with no demonstrated financial and logistical capacity in the industry for a big supply. According to the report, the procurement should have been handled in lots, given the magnitude of the procurement.
However, the petroleum commissioner ignored the advice from contract committee for a re-tendering of the procurement. The report further points out that the negotiations held with Kenlloyd-Logistics on the fuel price which increased the contract price from $25m to $26.4m were irregular in law. The Procurement Authority said the upward price adjustment would mean that in the event that Rift Valley Railway continued to adjust its prices, the Government may have to bear the increment.
The bidding document lacked preliminary, technical and financial evaluation criteria, a requirement for a bid security. In addition, a waiver from the PPDA to use the different bidding document was not sought as required by the regulations. The report states that the contracts committee did not approve the bidding document and that the procurement and disposal unit did not prepare and issue the bidding document contrary to Section 31 PPDA Act.
The Ministry of Energy has 55 licensed oil companies, but only invited 39 oil firms to bid. The report says it was not clear what criterion was used to invite the companies. Uganda is at a risk of continued fuel shortage if the Government does not find a solution to the depleted oil reserves in Jinja.
Findings, recommendations of the probe report
There was no post-qualification conducted to ascertain the financial and logistical capacity of Kenlloyd-Logistics.
The ministry ignored the concerns and directives of the ministerial sub-committee on economy and negotiated and awarded the contract to Kenlloyd-Logistics
The Ministry of Energy has 55 licensed oil companies but only invited 39 oil firms to bid.
Kenlloyd-Logistics, registered in 1997 deals in logistics and commodities and only started dealing in petroleum in 2003. How then did it beat big oil companies to clinch the deal?
The procurement for the fuel for the Government reserves should be re-tendered to mitigate risk and ensure sustainability of supplies.
Members of the contracts committee should be cautioned.
The waiver granted to the energy ministry to use the restricted domestic bidding method should be cancelled because the ministry abused it.
The Public Procurement (PPDA) and Disposal of Assets Authority and Parliament halted the murky sh45b deal awarded to a local company Kenlloyd-Logistics (U) Ltd early this month, citing several flaws in the procurement process.
Kenlloyd-Logistics was awarded the contract to restock the Government's strategic oil reserves in January. The company, registered in 1997, deals in logistics and commodities and only started dealing in petroleum in 2003, but beat big oil companies to clinch the deal.
The probe report says there was no evidence of the post-qualification to ascertain the capacity of Kenlloyd-Logistics. Which created uncertainty about the implementation of the contract. "The authority recommends that the accounting officer re-tenders the procurement for the fuel for the Government reserves to mitigate risk and ensure sustainability of the supplies," the report read.
The report calls for disciplinary action against the Commissioner Petroleum Supplies Department, Ben Twodo, for flouting the provisions of the PPDA Act and usurping the powers of the accounting officer and the contracts committee.The report also wants the members of the contracts committee cautioned for failure to correct the anomaly caused by the commissioner. The procurement authority has also cancelled the waiver granted to the energy ministry to use the restricted domestic bidding method, saying the ministry abused the waiver.
PPDA said the energy ministry sought for a waiver from the authority to use the domestic restricted bidding method after the procurement process had commenced. "The authority treats this as a fraudulent practice as defined under the PPDA Act, 2003. PPDA therefore revokes the waiver granted to the entity to use the restricted domestic bidding method in this tender since it does not grant retrospective approvals," the report further read.
The report noted that the procurement method used was not approved by the contracts committee contrary to Section 79 (2) of the PPDA Act, which states that the choice of the procurement or disposal method shall first be approved by the contracts committee.
During the investigation, the chairman of the contracts committee, Ernest Rubondo, said his committee had noted the inadequacy of the bidding document which lacked vital information, but had resolved that considering the fuel crisis at hand, the ministry should proceed with the procurement.
The contracts committee and procurement and disposal unit only got involved after invitation of bids. Given that the estimated value of the supplies exceeded about sh50m the open bidding method of procurement should have been used. However, the energy ministry did not apply to the PPDA for a deviation. It also stated that Twodo issued an invitation to bid, on behalf of the Permanent Secretary (PS), without the prior approval of the then acting PS William Luwemba Apuuli, contrary to the PPDA Act.
According to the report, the petroleum supplies department played the role of the accounting officer, contracts committee and procurement and disposal unit and therefore the invitation to bid issued to bidders was irregular in law. The PPDA report said other bidders were treated unfairly when the ministry allowed Kenlloyd-Logistics to have the backing of a third party - Vitol Group.
On January 23, Vitol Group communicated to the Accounting Officer, Ministry of Energy, confirming their intention to supply oil products to Kenlloyd-Logistics for the volumes tendered out by the ministry. "It should be noted that post-qualification in respect of ascertaining capacity of the supplier should go further than sending mails," the report said.
The investigation established that there was no post-qualification conducted to ascertain the capacity of Kenlloyd-Logistic which creates uncertainty about the implementation of the contract. PPDA points out that the ministry also ignored the concerns and directives of the ministerial sub-committee on economy and went ahead, negotiated and awarded the contract to Kenlloyd-Logistics.
In a January 31 memo to the PS, the ministerial sub-committee was disappointed over the award to only one supplier with no demonstrated financial and logistical capacity in the industry for a big supply. According to the report, the procurement should have been handled in lots, given the magnitude of the procurement.
However, the petroleum commissioner ignored the advice from contract committee for a re-tendering of the procurement. The report further points out that the negotiations held with Kenlloyd-Logistics on the fuel price which increased the contract price from $25m to $26.4m were irregular in law. The Procurement Authority said the upward price adjustment would mean that in the event that Rift Valley Railway continued to adjust its prices, the Government may have to bear the increment.
The bidding document lacked preliminary, technical and financial evaluation criteria, a requirement for a bid security. In addition, a waiver from the PPDA to use the different bidding document was not sought as required by the regulations. The report states that the contracts committee did not approve the bidding document and that the procurement and disposal unit did not prepare and issue the bidding document contrary to Section 31 PPDA Act.
The Ministry of Energy has 55 licensed oil companies, but only invited 39 oil firms to bid. The report says it was not clear what criterion was used to invite the companies. Uganda is at a risk of continued fuel shortage if the Government does not find a solution to the depleted oil reserves in Jinja.
Findings, recommendations of the probe report
There was no post-qualification conducted to ascertain the financial and logistical capacity of Kenlloyd-Logistics.
The ministry ignored the concerns and directives of the ministerial sub-committee on economy and negotiated and awarded the contract to Kenlloyd-Logistics
The Ministry of Energy has 55 licensed oil companies but only invited 39 oil firms to bid.
Kenlloyd-Logistics, registered in 1997 deals in logistics and commodities and only started dealing in petroleum in 2003. How then did it beat big oil companies to clinch the deal?
The procurement for the fuel for the Government reserves should be re-tendered to mitigate risk and ensure sustainability of supplies.
Members of the contracts committee should be cautioned.
The waiver granted to the energy ministry to use the restricted domestic bidding method should be cancelled because the ministry abused it.
Sh44b deal to minister' son-in-law halted
UGANDA'S public procurement authority has halted a contract worth $26m (sh44b) awarded to a local company, Kenlloyd-logistics, to restock the oil reserves in Jinja.
The energy ministry contravened public procurement rules when it used selective tendering instead of open bidding, according to the Public Procurement and Disposal of Public Assets Authority (PPDA).
The authority has suspended the deal as it investigates the procurement process, which it says had other flaws as well.
“The whole process should be stayed,” said Edgar Agaba, the PPDA director.
“We need to investigate Kenlloyd. Though it is a registered company dealing in oil, we need to know more about it and how it got the tender. We need to be careful to ensure that the Government’s interests are safe-guarded.”
The project to restock the Jinja depots with 30 million litres of fuel was meant to help Uganda overcome fuel shortages like the ones experienced in the past few months because of post-election violence in Kenya.
Kenlloyd-logistics was registered in Uganda in 1997. It deals in logistics and commodities and only started dealing in petroleum in 2003.
The company’s executive director and majority shareholder, Albert Muganga, is foreign affairs minister Sam Kutesa’s son-in-law. He owns 65% shares.
Muganga insists that his company won the contract on merit and not because of political influence. “It was an open tendering process which we won,” said Muganga. “My wife, Ishta Kutesa, has no connection with the company.”
But documents obtained by Sunday Vision show that Elizabeth Kutesa, another daughter of the foreign minister, has been guaranteeing loans worth billions of shillings for the company and was at one point a signatory to the company’s dollar account at Stanbic Bank.
“The directors Albert Muganga, John Masanda and Elizabeth Kyomugisha Kutesa be appointed and are hereby appointed signatories of the said account,” reads one document.
Elizabeth Kutesa previously worked for Hunton & Williams, a London law firm which was given a sh1.2b contract in 2005 to improve the Ugandan government’s image in Europe, a deal which drew widespread criticism.
Kenlloyd is a partner of Vitol Group, an international oil company which pleaded guilty in 2007 to larceny in connection with an oil-for-food deal in Iraq.
According to the plea, Vitol paid $13m in kickbacks to Iraqi officials for oil purchases and allowed false representations to be made to the United Nations that no kickbacks were paid.
Muganga confirmed that the company is in partnership with Vitol for its operations in the East African region.
Energy minister Daudi Migereko, however, said Kenlloyd is a subsidiary of Vitol Group.
Kenlloyd-logistics in January this year also entered into a joint venture with Gulf Energy and Libya Oil Kenya for the purpose of incorporating a company in the United Arab Emirates.
In addition, Kenlloyd last year guaranteed a loan of $102,760 for “SPLA (Sudan People’s Liberation Army) beneficiaries”, according to a resolution of the company’s board meeting of March 21. It is not known who the beneficiaries are or what the loan was for. K
enlloyd has a share capital of sh10m. On the URA list of top tax payers in the petroleum sector, it came number 17 last year. It paid sh1.5b in taxes, compared to sh105b paid by Shell, sh47b paid by Caltex and sh46b paid by Total.
Nevertheless, managing director John Masanda insists that his company has the capacity to handle a project of this magnitude given their regional presence. He points out that they have representations at both Mombassa and Dar-es- Salaam ports.
He also explained that the company has been supplying fuel to construction companies and individuals who own fuel stations in Kampala.
Migereko also insists he followed due process. But internal sources said the ministry diverted from the normal procedures because of the biting fuel crisis.
The decision to restock the oil reserves was made at a cabinet meeting on January 10. Subsequently, the ministry sent out letters to several oil companies in Kampala inviting them to tender. The companies were given five days, from January 16 to 22, to prepare and come in person with their bids.
According to the PPDA, this was against government procurement procedures. Legally, the ministry was supposed to advertise publicly, calling for bids within 45 days.
The advert was not placed in the newspaper, as required by law. The ministry also asked the oil companies not to submit their bids in advance, as required by law, but come with them in their hands.
A total of 11 companies applied. The bids were opened on January 22 and forwarded to the contract committee for selections. They were Shell, Caltex, Gapco, Moil, Mogas, Hass Petroleum, Mafuta, Kobil, Kenlloyd-Logistic Ltd, Phoenix and Matan.
Matan was disqualified on grounds of not being registered in Uganda. Total and Petro Oil were eliminated because they brought in their bids too late.
Besides the argument by Migereko that Kenlloyd-logistic quoted the lowest price, it is not known how the contract committee arrived at the winner.
“This has raised questions within the ministry but we were facing a crisis so those opposed gave up,” a source in the ministry said.
According to documents seen by Sunday Vision, the prices quoted ranged from $780 per cubic metre to $1,400 per cubic metre. Prices quoted varied depending on whether delivery would be made by road or rail, and whether it was petrol or diesel.
The ministry signed the contract with Kenlloyd at the end of February and this was approved by the Justice Ministry.
Sections of the Procurement Act allow a government office to flaw the tendering process in case of a crisis. However, the norm is that the ministry informs the procurement office beforehand, which was not done in this case.
The contract document stipulates that payment would be made upon delivery. To effect this agreement, the ministry needed to open a letter of credit to the company, a promise by the bank that the client will pay.
But the energy ministry did not have the money to effect the letter of credit and had to turn to the finance ministry. The finance ministry in turn needed the approval of parliament to release the money.
But after hearing the PPDA last week, Parliament decided to temporarily halt the process until the minister clears the allegations that his ministry flawed the procurement process.
“It is our opinion that this parliament waits to approve the request until we submit our report in two weeks time,” Agaba of PPDA had told the MPs.
The Auditor General, too, has declined to authorise the release of the sh45b, arguing that the expenditure would rise beyond the 3% government's supplementary ceiling.
There is only one operational fuel depot in the country, located in Jinja. The depot was commissioned in 1988 but it is said to be in a sorry state.
The energy ministry contravened public procurement rules when it used selective tendering instead of open bidding, according to the Public Procurement and Disposal of Public Assets Authority (PPDA).
The authority has suspended the deal as it investigates the procurement process, which it says had other flaws as well.
“The whole process should be stayed,” said Edgar Agaba, the PPDA director.
“We need to investigate Kenlloyd. Though it is a registered company dealing in oil, we need to know more about it and how it got the tender. We need to be careful to ensure that the Government’s interests are safe-guarded.”
The project to restock the Jinja depots with 30 million litres of fuel was meant to help Uganda overcome fuel shortages like the ones experienced in the past few months because of post-election violence in Kenya.
Kenlloyd-logistics was registered in Uganda in 1997. It deals in logistics and commodities and only started dealing in petroleum in 2003.
The company’s executive director and majority shareholder, Albert Muganga, is foreign affairs minister Sam Kutesa’s son-in-law. He owns 65% shares.
Muganga insists that his company won the contract on merit and not because of political influence. “It was an open tendering process which we won,” said Muganga. “My wife, Ishta Kutesa, has no connection with the company.”
But documents obtained by Sunday Vision show that Elizabeth Kutesa, another daughter of the foreign minister, has been guaranteeing loans worth billions of shillings for the company and was at one point a signatory to the company’s dollar account at Stanbic Bank.
“The directors Albert Muganga, John Masanda and Elizabeth Kyomugisha Kutesa be appointed and are hereby appointed signatories of the said account,” reads one document.
Elizabeth Kutesa previously worked for Hunton & Williams, a London law firm which was given a sh1.2b contract in 2005 to improve the Ugandan government’s image in Europe, a deal which drew widespread criticism.
Kenlloyd is a partner of Vitol Group, an international oil company which pleaded guilty in 2007 to larceny in connection with an oil-for-food deal in Iraq.
According to the plea, Vitol paid $13m in kickbacks to Iraqi officials for oil purchases and allowed false representations to be made to the United Nations that no kickbacks were paid.
Muganga confirmed that the company is in partnership with Vitol for its operations in the East African region.
Energy minister Daudi Migereko, however, said Kenlloyd is a subsidiary of Vitol Group.
Kenlloyd-logistics in January this year also entered into a joint venture with Gulf Energy and Libya Oil Kenya for the purpose of incorporating a company in the United Arab Emirates.
In addition, Kenlloyd last year guaranteed a loan of $102,760 for “SPLA (Sudan People’s Liberation Army) beneficiaries”, according to a resolution of the company’s board meeting of March 21. It is not known who the beneficiaries are or what the loan was for. K
enlloyd has a share capital of sh10m. On the URA list of top tax payers in the petroleum sector, it came number 17 last year. It paid sh1.5b in taxes, compared to sh105b paid by Shell, sh47b paid by Caltex and sh46b paid by Total.
Nevertheless, managing director John Masanda insists that his company has the capacity to handle a project of this magnitude given their regional presence. He points out that they have representations at both Mombassa and Dar-es- Salaam ports.
He also explained that the company has been supplying fuel to construction companies and individuals who own fuel stations in Kampala.
Migereko also insists he followed due process. But internal sources said the ministry diverted from the normal procedures because of the biting fuel crisis.
The decision to restock the oil reserves was made at a cabinet meeting on January 10. Subsequently, the ministry sent out letters to several oil companies in Kampala inviting them to tender. The companies were given five days, from January 16 to 22, to prepare and come in person with their bids.
According to the PPDA, this was against government procurement procedures. Legally, the ministry was supposed to advertise publicly, calling for bids within 45 days.
The advert was not placed in the newspaper, as required by law. The ministry also asked the oil companies not to submit their bids in advance, as required by law, but come with them in their hands.
A total of 11 companies applied. The bids were opened on January 22 and forwarded to the contract committee for selections. They were Shell, Caltex, Gapco, Moil, Mogas, Hass Petroleum, Mafuta, Kobil, Kenlloyd-Logistic Ltd, Phoenix and Matan.
Matan was disqualified on grounds of not being registered in Uganda. Total and Petro Oil were eliminated because they brought in their bids too late.
Besides the argument by Migereko that Kenlloyd-logistic quoted the lowest price, it is not known how the contract committee arrived at the winner.
“This has raised questions within the ministry but we were facing a crisis so those opposed gave up,” a source in the ministry said.
According to documents seen by Sunday Vision, the prices quoted ranged from $780 per cubic metre to $1,400 per cubic metre. Prices quoted varied depending on whether delivery would be made by road or rail, and whether it was petrol or diesel.
The ministry signed the contract with Kenlloyd at the end of February and this was approved by the Justice Ministry.
Sections of the Procurement Act allow a government office to flaw the tendering process in case of a crisis. However, the norm is that the ministry informs the procurement office beforehand, which was not done in this case.
The contract document stipulates that payment would be made upon delivery. To effect this agreement, the ministry needed to open a letter of credit to the company, a promise by the bank that the client will pay.
But the energy ministry did not have the money to effect the letter of credit and had to turn to the finance ministry. The finance ministry in turn needed the approval of parliament to release the money.
But after hearing the PPDA last week, Parliament decided to temporarily halt the process until the minister clears the allegations that his ministry flawed the procurement process.
“It is our opinion that this parliament waits to approve the request until we submit our report in two weeks time,” Agaba of PPDA had told the MPs.
The Auditor General, too, has declined to authorise the release of the sh45b, arguing that the expenditure would rise beyond the 3% government's supplementary ceiling.
There is only one operational fuel depot in the country, located in Jinja. The depot was commissioned in 1988 but it is said to be in a sorry state.
Uganda: Kenlloyd-Logistics Loses Fuel Deal
THE Uganda Procurement Authority has directed the energy ministry to re-tender the procurement of fuel to restock the Government's oil reserves in Jinja.
The Public Procurement (PPDA) and Disposal of Assets Authority and Parliament halted the murky sh45b deal awarded to a local company Kenlloyd-Logistics (U) Ltd early this month, citing several flaws in the procurement process.
Kenlloyd-Logistics was awarded the contract to restock the Government's strategic oil reserves in January. The company, registered in 1997, deals in logistics and commodities and only started dealing in petroleum in 2003, but beat big oil companies to clinch the deal.
The probe report says there was no evidence of the post-qualification to ascertain the capacity of Kenlloyd-Logistics. Which created uncertainty about the implementation of the contract. "The authority recommends that the accounting officer re-tenders the procurement for the fuel for the Government reserves to mitigate risk and ensure sustainability of the supplies," the report read.
The report calls for disciplinary action against the Commissioner Petroleum Supplies Department, Ben Twodo, for flouting the provisions of the PPDA Act and usurping the powers of the accounting officer and the contracts committee.The report also wants the members of the contracts committee cautioned for failure to correct the anomaly caused by the commissioner. The procurement authority has also cancelled the waiver granted to the energy ministry to use the restricted domestic bidding method, saying the ministry abused the waiver.
PPDA said the energy ministry sought for a waiver from the authority to use the domestic restricted bidding method after the procurement process had commenced. "The authority treats this as a fraudulent practice as defined under the PPDA Act, 2003. PPDA therefore revokes the waiver granted to the entity to use the restricted domestic bidding method in this tender since it does not grant retrospective approvals," the report further read.
The report noted that the procurement method used was not approved by the contracts committee contrary to Section 79 (2) of the PPDA Act, which states that the choice of the procurement or disposal method shall first be approved by the contracts committee.
During the investigation, the chairman of the contracts committee, Ernest Rubondo, said his committee had noted the inadequacy of the bidding document which lacked vital information, but had resolved that considering the fuel crisis at hand, the ministry should proceed with the procurement.
The contracts committee and procurement and disposal unit only got involved after invitation of bids. Given that the estimated value of the supplies exceeded about sh50m the open bidding method of procurement should have been used. However, the energy ministry did not apply to the PPDA for a deviation. It also stated that Twodo issued an invitation to bid, on behalf of the Permanent Secretary (PS), without the prior approval of the then acting PS William Luwemba Apuuli, contrary to the PPDA Act.
According to the report, the petroleum supplies department played the role of the accounting officer, contracts committee and procurement and disposal unit and therefore the invitation to bid issued to bidders was irregular in law. The PPDA report said other bidders were treated unfairly when the ministry allowed Kenlloyd-Logistics to have the backing of a third party - Vitol Group.
On January 23, Vitol Group communicated to the Accounting Officer, Ministry of Energy, confirming their intention to supply oil products to Kenlloyd-Logistics for the volumes tendered out by the ministry. "It should be noted that post-qualification in respect of ascertaining capacity of the supplier should go further than sending mails," the report said.
The investigation established that there was no post-qualification conducted to ascertain the capacity of Kenlloyd-Logistic which creates uncertainty about the implementation of the contract. PPDA points out that the ministry also ignored the concerns and directives of the ministerial sub-committee on economy and went ahead, negotiated and awarded the contract to Kenlloyd-Logistics.
In a January 31 memo to the PS, the ministerial sub-committee was disappointed over the award to only one supplier with no demonstrated financial and logistical capacity in the industry for a big supply. According to the report, the procurement should have been handled in lots, given the magnitude of the procurement.
However, the petroleum commissioner ignored the advice from contract committee for a re-tendering of the procurement. The report further points out that the negotiations held with Kenlloyd-Logistics on the fuel price which increased the contract price from $25m to $26.4m were irregular in law. The Procurement Authority said the upward price adjustment would mean that in the event that Rift Valley Railway continued to adjust its prices, the Government may have to bear the increment.
The bidding document lacked preliminary, technical and financial evaluation criteria, a requirement for a bid security. In addition, a waiver from the PPDA to use the different bidding document was not sought as required by the regulations. The report states that the contracts committee did not approve the bidding document and that the procurement and disposal unit did not prepare and issue the bidding document contrary to Section 31 PPDA Act.
The Ministry of Energy has 55 licensed oil companies, but only invited 39 oil firms to bid. The report says it was not clear what criterion was used to invite the companies. Uganda is at a risk of continued fuel shortage if the Government does not find a solution to the depleted oil reserves in Jinja.
Findings, recommendations of the probe report
There was no post-qualification conducted to ascertain the financial and logistical capacity of Kenlloyd-Logistics.
The ministry ignored the concerns and directives of the ministerial sub-committee on economy and negotiated and awarded the contract to Kenlloyd-Logistics
The Ministry of Energy has 55 licensed oil companies but only invited 39 oil firms to bid.
Kenlloyd-Logistics, registered in 1997 deals in logistics and commodities and only started dealing in petroleum in 2003. How then did it beat big oil companies to clinch the deal?
The procurement for the fuel for the Government reserves should be re-tendered to mitigate risk and ensure sustainability of supplies.
Members of the contracts committee should be cautioned.
The waiver granted to the energy ministry to use the restricted domestic bidding method should be cancelled because the ministry abused it.
The Public Procurement (PPDA) and Disposal of Assets Authority and Parliament halted the murky sh45b deal awarded to a local company Kenlloyd-Logistics (U) Ltd early this month, citing several flaws in the procurement process.
Kenlloyd-Logistics was awarded the contract to restock the Government's strategic oil reserves in January. The company, registered in 1997, deals in logistics and commodities and only started dealing in petroleum in 2003, but beat big oil companies to clinch the deal.
The probe report says there was no evidence of the post-qualification to ascertain the capacity of Kenlloyd-Logistics. Which created uncertainty about the implementation of the contract. "The authority recommends that the accounting officer re-tenders the procurement for the fuel for the Government reserves to mitigate risk and ensure sustainability of the supplies," the report read.
The report calls for disciplinary action against the Commissioner Petroleum Supplies Department, Ben Twodo, for flouting the provisions of the PPDA Act and usurping the powers of the accounting officer and the contracts committee.The report also wants the members of the contracts committee cautioned for failure to correct the anomaly caused by the commissioner. The procurement authority has also cancelled the waiver granted to the energy ministry to use the restricted domestic bidding method, saying the ministry abused the waiver.
PPDA said the energy ministry sought for a waiver from the authority to use the domestic restricted bidding method after the procurement process had commenced. "The authority treats this as a fraudulent practice as defined under the PPDA Act, 2003. PPDA therefore revokes the waiver granted to the entity to use the restricted domestic bidding method in this tender since it does not grant retrospective approvals," the report further read.
The report noted that the procurement method used was not approved by the contracts committee contrary to Section 79 (2) of the PPDA Act, which states that the choice of the procurement or disposal method shall first be approved by the contracts committee.
During the investigation, the chairman of the contracts committee, Ernest Rubondo, said his committee had noted the inadequacy of the bidding document which lacked vital information, but had resolved that considering the fuel crisis at hand, the ministry should proceed with the procurement.
The contracts committee and procurement and disposal unit only got involved after invitation of bids. Given that the estimated value of the supplies exceeded about sh50m the open bidding method of procurement should have been used. However, the energy ministry did not apply to the PPDA for a deviation. It also stated that Twodo issued an invitation to bid, on behalf of the Permanent Secretary (PS), without the prior approval of the then acting PS William Luwemba Apuuli, contrary to the PPDA Act.
According to the report, the petroleum supplies department played the role of the accounting officer, contracts committee and procurement and disposal unit and therefore the invitation to bid issued to bidders was irregular in law. The PPDA report said other bidders were treated unfairly when the ministry allowed Kenlloyd-Logistics to have the backing of a third party - Vitol Group.
On January 23, Vitol Group communicated to the Accounting Officer, Ministry of Energy, confirming their intention to supply oil products to Kenlloyd-Logistics for the volumes tendered out by the ministry. "It should be noted that post-qualification in respect of ascertaining capacity of the supplier should go further than sending mails," the report said.
The investigation established that there was no post-qualification conducted to ascertain the capacity of Kenlloyd-Logistic which creates uncertainty about the implementation of the contract. PPDA points out that the ministry also ignored the concerns and directives of the ministerial sub-committee on economy and went ahead, negotiated and awarded the contract to Kenlloyd-Logistics.
In a January 31 memo to the PS, the ministerial sub-committee was disappointed over the award to only one supplier with no demonstrated financial and logistical capacity in the industry for a big supply. According to the report, the procurement should have been handled in lots, given the magnitude of the procurement.
However, the petroleum commissioner ignored the advice from contract committee for a re-tendering of the procurement. The report further points out that the negotiations held with Kenlloyd-Logistics on the fuel price which increased the contract price from $25m to $26.4m were irregular in law. The Procurement Authority said the upward price adjustment would mean that in the event that Rift Valley Railway continued to adjust its prices, the Government may have to bear the increment.
The bidding document lacked preliminary, technical and financial evaluation criteria, a requirement for a bid security. In addition, a waiver from the PPDA to use the different bidding document was not sought as required by the regulations. The report states that the contracts committee did not approve the bidding document and that the procurement and disposal unit did not prepare and issue the bidding document contrary to Section 31 PPDA Act.
The Ministry of Energy has 55 licensed oil companies, but only invited 39 oil firms to bid. The report says it was not clear what criterion was used to invite the companies. Uganda is at a risk of continued fuel shortage if the Government does not find a solution to the depleted oil reserves in Jinja.
Findings, recommendations of the probe report
There was no post-qualification conducted to ascertain the financial and logistical capacity of Kenlloyd-Logistics.
The ministry ignored the concerns and directives of the ministerial sub-committee on economy and negotiated and awarded the contract to Kenlloyd-Logistics
The Ministry of Energy has 55 licensed oil companies but only invited 39 oil firms to bid.
Kenlloyd-Logistics, registered in 1997 deals in logistics and commodities and only started dealing in petroleum in 2003. How then did it beat big oil companies to clinch the deal?
The procurement for the fuel for the Government reserves should be re-tendered to mitigate risk and ensure sustainability of supplies.
Members of the contracts committee should be cautioned.
The waiver granted to the energy ministry to use the restricted domestic bidding method should be cancelled because the ministry abused it.
Libyans take over Jinja oil reserves
THE Government has given the Jinja national oil reserve to TAMOIL, a Libyan oil company. The Cabinet directed the energy ministry to hand over the country’s only reserves in a letter of January 7, 2009.
The decision comes at a time when the Government has unveiled plans to construct a 150 million-litre capacity fuel depot in Kampala to deal with emergencies.
TAMOIL is constructing the Kampala Oil Products Terminal as well as the $250m (sh425b) Eldoret-Kampala oil pipeline extension project.
According to documents, the 30 million-litre oil facility will be integrated into the pipeline project.
Energy state minister Simon D’Ujanga said the tanks would be part of the pipeline and as such, would automatically be managed by TAMOIL.
“In the past it was a strategic fuel reserve, but we are now turning it into an operational fuel reserve,” D’Ujanga said. “Initially we wanted a pipeline, but later we said it will be better if it has an operational capacity along the way.”
However, the contract was not advertised as required by the Public Procurement and Disposal of Assets Authority (PPDA) Act and as such it can be challenged.
The Act prohibits sole sourcing of a public asset, service or goods except in an emergency where the waiver is granted by the procurement authority.
Consequently, the energy ministry wrote to the PPDA on January 30, 2009, seeking permission to go ahead with the deal.
Acting permanent secretary Eng. Paul Mubiru said in a letter since the Cabinet had already decided to hand over the tanks to TAMOIL, it had to implement the directive.
He said TAMOIL had the skills and experience in fuel supply and depot operation and had already produced the design for up-grading the facility.
“The cost of repair and restocking will be met by TAMOIL,” he said.
“This will save the Government from having to use its own funds.”
PPDA boss Edgar Agaba declined to comment on the matter.
However, documents show that PPDA wrote back to the ministry last month, saying the issue was outside its mandate. The PPDA said the matter was being handled by a Joint Coordinating Commission (JCC) formed by Kenya and Uganda to manage the pipeline project.
“Any contracting arrangements in respect of the Jinja Storage Tanks and Tamoil are the responsibility of the JCC,” acting PPDA boss Cornelia Sabiiti said in the letter. He instead referred the ministry to the Solicitor General for legal advice.
Earlier, the Solicitor General had said that the JCC was acting on behalf of Kenya and Uganda and so its decisions overrode the PPDA Act.
Under the current arrangement, TAMOIL will build the pipeline, own 51% of it, form a joint venture company with the Ugandan and Kenyan governments to operate it for 20 years before surrendering ownership to them.
Uganda started building the oil reserves in Jinja, Nakasongola, Gulu and Kasese in the 1970s. However, only the Jinja one was built with a capacity of 30 million litres. The facility needed sh31.23b to refurbish and restock. The Government said it did not have the money and so gave the deal to TAMOIL.
The energy ministry has been struggling to raise the sh50b needed to restock the reserves with at least 20 million litres of diesel and 10 million litres of petrol.
At least sh79m was needed to repair the hose pipes, sh74.7m for the depot repair and sh82m to transport three million litres of kerosene from Jinja depot to Kampala.
The Government sold 11.5 million litres in 2002 and realised over $37m (sh64.7b) which it used to buy fire fighting equipment for the reserves.
The first attempt to restock the oil reserves was cancelled by the PPDA because the energy ministry contravened procurement rules in awarding the contract to Kenlyod Logistics.
The project was re-tendered and awarded to GAPCO and MOGAS oil companies. The companies, however, did not sign contracts because the ministry lacked money.
Shortly afterwards, the ministry closed down the empty depot, exposing the country to greater risk of fuel shortage. The Mombasa oil refinery is due to close for renovation in June.
Uganda suffers acute oil shortages whenever there is a disruption in the supply line from Kenya. Over the last five years, the country has suffered shortages in December, January, March, April and in June.
Uganda relies on oil companies whose limited facilities can hardly store fuel to last the country 10 days. Uganda consumes 2.2 million litres daily and demand grows by 7% annually.
The new management is expected to renovate and increase the capacity of the existing oil reserves, buy new equipment, build three new tanks and install a computerised monitoring system.
Tamoil won the right to build a $60m liquid petroleum gas storage facility in Mombasa in 2007 under a deal which caused a public outcry as the Kenya government carried out sole sourcing.
The Libyan firm is also investing $300m in upgrading the Mombasa refinery, which serves the entire East Africa market with refined products.
The relinquishing of the country’s only oil reserves by the Government also follows several failed attempts by energy ministry last year to restock the tanks.
Political interference coupled with the refusal of Parliament to approve the sh45b requested by the energy ministry to restock the reserves bogged down the project.
The Auditor General too declined to issue an Audit Warrant for the sh45b, arguing that the expenditure would have risen beyond the 3% government’s supplementary ceiling.
The decision comes at a time when the Government has unveiled plans to construct a 150 million-litre capacity fuel depot in Kampala to deal with emergencies.
TAMOIL is constructing the Kampala Oil Products Terminal as well as the $250m (sh425b) Eldoret-Kampala oil pipeline extension project.
According to documents, the 30 million-litre oil facility will be integrated into the pipeline project.
Energy state minister Simon D’Ujanga said the tanks would be part of the pipeline and as such, would automatically be managed by TAMOIL.
“In the past it was a strategic fuel reserve, but we are now turning it into an operational fuel reserve,” D’Ujanga said. “Initially we wanted a pipeline, but later we said it will be better if it has an operational capacity along the way.”
However, the contract was not advertised as required by the Public Procurement and Disposal of Assets Authority (PPDA) Act and as such it can be challenged.
The Act prohibits sole sourcing of a public asset, service or goods except in an emergency where the waiver is granted by the procurement authority.
Consequently, the energy ministry wrote to the PPDA on January 30, 2009, seeking permission to go ahead with the deal.
Acting permanent secretary Eng. Paul Mubiru said in a letter since the Cabinet had already decided to hand over the tanks to TAMOIL, it had to implement the directive.
He said TAMOIL had the skills and experience in fuel supply and depot operation and had already produced the design for up-grading the facility.
“The cost of repair and restocking will be met by TAMOIL,” he said.
“This will save the Government from having to use its own funds.”
PPDA boss Edgar Agaba declined to comment on the matter.
However, documents show that PPDA wrote back to the ministry last month, saying the issue was outside its mandate. The PPDA said the matter was being handled by a Joint Coordinating Commission (JCC) formed by Kenya and Uganda to manage the pipeline project.
“Any contracting arrangements in respect of the Jinja Storage Tanks and Tamoil are the responsibility of the JCC,” acting PPDA boss Cornelia Sabiiti said in the letter. He instead referred the ministry to the Solicitor General for legal advice.
Earlier, the Solicitor General had said that the JCC was acting on behalf of Kenya and Uganda and so its decisions overrode the PPDA Act.
Under the current arrangement, TAMOIL will build the pipeline, own 51% of it, form a joint venture company with the Ugandan and Kenyan governments to operate it for 20 years before surrendering ownership to them.
Uganda started building the oil reserves in Jinja, Nakasongola, Gulu and Kasese in the 1970s. However, only the Jinja one was built with a capacity of 30 million litres. The facility needed sh31.23b to refurbish and restock. The Government said it did not have the money and so gave the deal to TAMOIL.
The energy ministry has been struggling to raise the sh50b needed to restock the reserves with at least 20 million litres of diesel and 10 million litres of petrol.
At least sh79m was needed to repair the hose pipes, sh74.7m for the depot repair and sh82m to transport three million litres of kerosene from Jinja depot to Kampala.
The Government sold 11.5 million litres in 2002 and realised over $37m (sh64.7b) which it used to buy fire fighting equipment for the reserves.
The first attempt to restock the oil reserves was cancelled by the PPDA because the energy ministry contravened procurement rules in awarding the contract to Kenlyod Logistics.
The project was re-tendered and awarded to GAPCO and MOGAS oil companies. The companies, however, did not sign contracts because the ministry lacked money.
Shortly afterwards, the ministry closed down the empty depot, exposing the country to greater risk of fuel shortage. The Mombasa oil refinery is due to close for renovation in June.
Uganda suffers acute oil shortages whenever there is a disruption in the supply line from Kenya. Over the last five years, the country has suffered shortages in December, January, March, April and in June.
Uganda relies on oil companies whose limited facilities can hardly store fuel to last the country 10 days. Uganda consumes 2.2 million litres daily and demand grows by 7% annually.
The new management is expected to renovate and increase the capacity of the existing oil reserves, buy new equipment, build three new tanks and install a computerised monitoring system.
Tamoil won the right to build a $60m liquid petroleum gas storage facility in Mombasa in 2007 under a deal which caused a public outcry as the Kenya government carried out sole sourcing.
The Libyan firm is also investing $300m in upgrading the Mombasa refinery, which serves the entire East Africa market with refined products.
The relinquishing of the country’s only oil reserves by the Government also follows several failed attempts by energy ministry last year to restock the tanks.
Political interference coupled with the refusal of Parliament to approve the sh45b requested by the energy ministry to restock the reserves bogged down the project.
The Auditor General too declined to issue an Audit Warrant for the sh45b, arguing that the expenditure would have risen beyond the 3% government’s supplementary ceiling.
Microcare in financial crisis
Microcare, Uganda’s biggest health insurance company, has been struck off the list of licensed insurance companies. The company, that covers 70,000 people in a network of 157 health facilities across the country, is facing a financial crisis, in which over a dozen health service providers are demanding over sh2bn in unpaid bills.
The health providers on Wednesday filed a case in the High Court, seeking to wind up the company.
In a public announcement on February 27, 2009, the Uganda Insurance Commission drew a list of authorised insurance companies and warned the public against dealing with unlicensed insurers, insurance brokers, agents, loss adjusters, assessors and insurance surveyors.
The commission listed five life insurance companies, 18 life insurance brokers as well as 19 non-life insurance companies, non-life insurance brokers. Microcare Insurance Limited never featured on any of the lists.
The Commission’s acting boss, Evelyn Nkalubo-Muwemba, said Microcare, incorporated in Uganda in June 2004, had failed to meet some licensing requirements. “But as soon as the company meets this, we will licence it,” she said.
For a company to be licensed, Nkalubo-Muwemba explained, it should have met criteria such as the sh1b security deposit with Bank of Uganda, sh2.5b in case of reinsurance business, approval by the insurance association, the COMESA yellow card requirement, authorised share capital and paid up share capital.
Microcare however insisted that they have complied with all the Commission’s requirements for the renewal of their license.
“The Uganda Insurance Commission has not revoked or stopped Microcare from transacting insurance business,” said the marketing manager, Clare Tumwesigye.
“It should be noted that it is normal for a company not to be advertised if the regulatory body is still pursing some administrative processes. We are in touch with the commission regarding our license of 2009 and would not like to divulge the details of our discussions but you are free to inquire from it (the commission) if we have been stopped from transacting insurance business,” she added.
Tumwesigye dismissed allegations that they owe health service providers billions of shillings.
She said: “Microcare handles volumes of data processed every day and this is bound to cause friction some times, which leads to reconciliation meetings of accounts, which is what we are doing with some clinics. We do not want to discuss our service providers’ business in the press.
Investigations by Saturday Vision however revealed that some of the health service providers have suspended their services to patients under the Microcare health insurance scheme. Some of the clinics have also either taken legal action or are planning to do so to recover the money the health insurance owes them.
The first client to drag Microcare to court was Kadic Hospital in Bukoto, for non payment of up to sh150m, allegedly accumulated over three years. Microcare has since paid sh60m, leaving a balance of sh90m. The company also owes Case Clinic, sh700m, Paragon Hospital, sh770m, Mulago Hospital private wing, sh180m and Kampala Family clinic sh60m.
Others are Gulu Independent Hospital, sh150m, Mbarara Community Hospital, sh67m, St. Catherine Clinic, sh108m, Byansi Clinic, Masaka, sh8m and Rubaga Hospital, sh30m. Gulu Independent Hospital is the latest on the list to serve the company with a notice to sue.
Also owed unspecified amounts are Nsambya hospital, Bugolobi nursing home, SAS clinic, Mayanja Memorial Hospital, Pan Dental Surgery, Victoria Medical Centre and Nakasero Hospital among others. The other service providers that have suspended their services with the company over unpaid bills include Abii Clinic and Laboratory Services, Victoria Medical Centre and Friecca Pharmacy in Wandegeya.
The Microcare financial crisis comes at a time when the Government is planning to introduce a Social Health Insurance Scheme.
Ten of the affected health service providers have engaged Kizito, Lumu and Company advocates of Kampala seeking protection from the Uganda Insurance Commission. The health service providers have also filed a case at the High Court seeking to wind up Microcare.
Five companies acting as one
Health service providers are complaining that there are five companies using the name Microcare and acting as one entity. A look through the letters sent or agreement signed between several companies and Microcare, spells different names. There is Microcare, Microcare Health, Microcare Health Ltd, Microcare Insurance and Microcare Insurance Ltd.
The health service providers now fear that the company could easily close shop without paying what is due to them. “The Uganda Insurance Commission should inform us and the general public which company is registered under the laws of this country with the Insurance Commission to offer insurance cover to the public so that the public and other companies are protected from becoming victims as our clients are, currently,” the lawyers demanded.
To compound their worry further, the service providers said they do not know whether it is a registered insurance company since its files went missing from the registrar of companies. Further complicating matters are clauses in the agreement signed between health service providers with Microcare, which prevents them from directly reaching to Microcare clients. It also stipulates that Microcare has the right to reject a bill if the drug provided for is not agreeable to them, if doctor exaggerates a bill and when a hospital treats congenital illness.
“In accordance with the agreements, our clients have fulfilled their part and to their dismay, the insurance company has consistently failed to honour their part,” the lawyers complained to the Commission.
They claimed that Microcare has placed the bills under quarantine, instead of paying them. This, they said, was a breach of contract.
However, Microcare blames the delay in settling bills on incorrect or exaggerated bills. The hospitals dismissed this accusation. They said the Microcare desk at hospitals and clinics verifies the bills before any treatment is provided.
Affecting Operations
Saturday Vision has learnt that a number of private health centres wallow in debt, some of them resulting from heavy borrowing forced on them after insurance firms delayed to settle medical bills. Some facilities have either scaled-down their operations, are contemplating shutting down, or are shopping for investors to re-capitalise and resuscitate the businesses.
The Microcare mess is just one of the troubles facing health service providers. Several botched medical insurance schemes and expensive bank loans have pushed a number of up market private hospitals into financial difficulties.
For instance, the Uganda Revenue Authority (URA) recently almost closed down Kadic Hospital in Bukoto. The URA also raided the accounts of Paragon Hospital due to non-remittance of PAYE, exceeding sh79m.
“You send a bill of sh15m, they give you only sh8m. Each time you send them a bill, they retain a certain fee and eventually you find the bill accumulating,” said an executive director of a hospital.
Hospitals and clinics complained that these companies take several months, at times years, before settling their bills. The general contract with insurance companies is that they pay within 30 days of submitting an invoice, but many insurance companies take as long as 4-6 months before paying.
In turn, the hospitals borrow from banks at high interest rates to meet operational costs.
Weak health insurance sector
The scrapping of Microcare leaves only two companies, Medicare (under East African Underwriters) and Liberty (under Standard Bank Group of South Africa that trades here as Stanbic) licensed to provide medical insurance.
There are also Health Maintenance Organisations (HMOs) that operate in a way similar to health insurance companies – taking funds from individuals and companies to provide medical services in the long-term. Currently there are five HMOs in Uganda: Africa Air Rescue (AAR), International Health Network (IHN), International Air Ambulance (IAA), Kadic Health Foundation (KHF) and Case Medicare. However, their services are not regulated by any law.
The health providers on Wednesday filed a case in the High Court, seeking to wind up the company.
In a public announcement on February 27, 2009, the Uganda Insurance Commission drew a list of authorised insurance companies and warned the public against dealing with unlicensed insurers, insurance brokers, agents, loss adjusters, assessors and insurance surveyors.
The commission listed five life insurance companies, 18 life insurance brokers as well as 19 non-life insurance companies, non-life insurance brokers. Microcare Insurance Limited never featured on any of the lists.
The Commission’s acting boss, Evelyn Nkalubo-Muwemba, said Microcare, incorporated in Uganda in June 2004, had failed to meet some licensing requirements. “But as soon as the company meets this, we will licence it,” she said.
For a company to be licensed, Nkalubo-Muwemba explained, it should have met criteria such as the sh1b security deposit with Bank of Uganda, sh2.5b in case of reinsurance business, approval by the insurance association, the COMESA yellow card requirement, authorised share capital and paid up share capital.
Microcare however insisted that they have complied with all the Commission’s requirements for the renewal of their license.
“The Uganda Insurance Commission has not revoked or stopped Microcare from transacting insurance business,” said the marketing manager, Clare Tumwesigye.
“It should be noted that it is normal for a company not to be advertised if the regulatory body is still pursing some administrative processes. We are in touch with the commission regarding our license of 2009 and would not like to divulge the details of our discussions but you are free to inquire from it (the commission) if we have been stopped from transacting insurance business,” she added.
Tumwesigye dismissed allegations that they owe health service providers billions of shillings.
She said: “Microcare handles volumes of data processed every day and this is bound to cause friction some times, which leads to reconciliation meetings of accounts, which is what we are doing with some clinics. We do not want to discuss our service providers’ business in the press.
Investigations by Saturday Vision however revealed that some of the health service providers have suspended their services to patients under the Microcare health insurance scheme. Some of the clinics have also either taken legal action or are planning to do so to recover the money the health insurance owes them.
The first client to drag Microcare to court was Kadic Hospital in Bukoto, for non payment of up to sh150m, allegedly accumulated over three years. Microcare has since paid sh60m, leaving a balance of sh90m. The company also owes Case Clinic, sh700m, Paragon Hospital, sh770m, Mulago Hospital private wing, sh180m and Kampala Family clinic sh60m.
Others are Gulu Independent Hospital, sh150m, Mbarara Community Hospital, sh67m, St. Catherine Clinic, sh108m, Byansi Clinic, Masaka, sh8m and Rubaga Hospital, sh30m. Gulu Independent Hospital is the latest on the list to serve the company with a notice to sue.
Also owed unspecified amounts are Nsambya hospital, Bugolobi nursing home, SAS clinic, Mayanja Memorial Hospital, Pan Dental Surgery, Victoria Medical Centre and Nakasero Hospital among others. The other service providers that have suspended their services with the company over unpaid bills include Abii Clinic and Laboratory Services, Victoria Medical Centre and Friecca Pharmacy in Wandegeya.
The Microcare financial crisis comes at a time when the Government is planning to introduce a Social Health Insurance Scheme.
Ten of the affected health service providers have engaged Kizito, Lumu and Company advocates of Kampala seeking protection from the Uganda Insurance Commission. The health service providers have also filed a case at the High Court seeking to wind up Microcare.
Five companies acting as one
Health service providers are complaining that there are five companies using the name Microcare and acting as one entity. A look through the letters sent or agreement signed between several companies and Microcare, spells different names. There is Microcare, Microcare Health, Microcare Health Ltd, Microcare Insurance and Microcare Insurance Ltd.
The health service providers now fear that the company could easily close shop without paying what is due to them. “The Uganda Insurance Commission should inform us and the general public which company is registered under the laws of this country with the Insurance Commission to offer insurance cover to the public so that the public and other companies are protected from becoming victims as our clients are, currently,” the lawyers demanded.
To compound their worry further, the service providers said they do not know whether it is a registered insurance company since its files went missing from the registrar of companies. Further complicating matters are clauses in the agreement signed between health service providers with Microcare, which prevents them from directly reaching to Microcare clients. It also stipulates that Microcare has the right to reject a bill if the drug provided for is not agreeable to them, if doctor exaggerates a bill and when a hospital treats congenital illness.
“In accordance with the agreements, our clients have fulfilled their part and to their dismay, the insurance company has consistently failed to honour their part,” the lawyers complained to the Commission.
They claimed that Microcare has placed the bills under quarantine, instead of paying them. This, they said, was a breach of contract.
However, Microcare blames the delay in settling bills on incorrect or exaggerated bills. The hospitals dismissed this accusation. They said the Microcare desk at hospitals and clinics verifies the bills before any treatment is provided.
Affecting Operations
Saturday Vision has learnt that a number of private health centres wallow in debt, some of them resulting from heavy borrowing forced on them after insurance firms delayed to settle medical bills. Some facilities have either scaled-down their operations, are contemplating shutting down, or are shopping for investors to re-capitalise and resuscitate the businesses.
The Microcare mess is just one of the troubles facing health service providers. Several botched medical insurance schemes and expensive bank loans have pushed a number of up market private hospitals into financial difficulties.
For instance, the Uganda Revenue Authority (URA) recently almost closed down Kadic Hospital in Bukoto. The URA also raided the accounts of Paragon Hospital due to non-remittance of PAYE, exceeding sh79m.
“You send a bill of sh15m, they give you only sh8m. Each time you send them a bill, they retain a certain fee and eventually you find the bill accumulating,” said an executive director of a hospital.
Hospitals and clinics complained that these companies take several months, at times years, before settling their bills. The general contract with insurance companies is that they pay within 30 days of submitting an invoice, but many insurance companies take as long as 4-6 months before paying.
In turn, the hospitals borrow from banks at high interest rates to meet operational costs.
Weak health insurance sector
The scrapping of Microcare leaves only two companies, Medicare (under East African Underwriters) and Liberty (under Standard Bank Group of South Africa that trades here as Stanbic) licensed to provide medical insurance.
There are also Health Maintenance Organisations (HMOs) that operate in a way similar to health insurance companies – taking funds from individuals and companies to provide medical services in the long-term. Currently there are five HMOs in Uganda: Africa Air Rescue (AAR), International Health Network (IHN), International Air Ambulance (IAA), Kadic Health Foundation (KHF) and Case Medicare. However, their services are not regulated by any law.
IGG clears controversial internet project
THE Inspectorate of Government has cleared the controversial sh200b Government internet project. The project, which consists of three phases, involves building a 2,100km fibre optic cable network.
Ultimately, it is meant to link Uganda to the submarine cable on the East African coast and provide faster and cheaper internet access.
The Inspector General of Government (IGG), Raphael Baku, gave the go-ahead in a letter to ethics minister Nsaba Buturo earlier this month.
Last August, President Yoweri Museveni had tasked Buturo to oversee the investigations into complaints raised about the project.
Baku explained that the project was being implemented by the time the complaint was registered with his office. “The complaint which was raised was whether the second phase should go on,” said Baku.
“We saw no problem with it if the damages (on the first phase) could be repaired concurrently.”
The IGG argued that the Government would incur more costs if it cancelled the project.
Baku also said the ICT minister did not have the capacity to monitor the implementation of the project, which led to the shoddy work.
The IGG clearance comes after the parliamentary committee on ICT issued a directive to suspend the second phase of the rpoject.
The committee vice-chairperson, Paula Turyahikayo, said they had not seen the IGG report but would hold a joint meeting with the ICT ministry and the Auditor General on the way forward.
The Auditor General in a December report found several anomalies in the implementation of the project and questioned if there was value for money.
The national transmission backbone infrastructure and E-Government infrastructure is a $106m (sh201b) project, funded by a concessional loan from the export/import bank of China.
The first phase was meant to provide connectivity to Government ministries and departments at a total cost of $30m (sh57b).
The second and third phases were meant to connect all major towns, covering 1,900 kms at a cost of $61 million and $15 million respectively.
However, investigations found that the selection of the contractor, Huwaei Technologies, was done without competitive bidding and no price comparisons were done to ensure value for money.
“By not subjecting the proposal to proper evaluation, the ministry exposed itself to the risk of high pricing and unfavourable contract terms,” read the Auditor General’s report.
The audit found that the cost of the project was inflated. The 24 core optic cable was quoted by the contractor at $3,200 (sh6m) per kilometer.
However, in a technology brief to the board of the National Information Technology Authority of Uganda, the price of the cable was quoted as $1,400 (sh2.6m) per kilometer.
In addition, the audit found that the 24 core cable is of lower capacity than what private companies such as MTN and the Government of Rwanda laid at a much cheaper rate. It also questioned the capacity of 24 core cables to meet the under-water bury standards.
The audit further found that there was poor supervision of the project and that key implementation guidelines were not adhered to.
According to the report, the cables were placed too close to the road. Also, the depth was less that the recommended 1.5 metre and the distance from the middle of the road was found to be less than the 15 metres recommended.
There were also serious delays in the project, the Auditor General noted. Implementation of the three phases was supposed to be completed in 27 months, or by January 2009.
“However, 38 months later, the first phase, originally to be implemented in six months, has not been fully completed.” The delay is expected to lead to further administrative costs.
Already, the company has claimed $2.2m in additional costs for repairs on the first phase. The permanent secretary of the ICT ministry argued that the damages occurred after the hand-over of the network and could therefore not be covered by the insurance.
But the Auditor General observed that there was no independent assessment of the extent of the repairs, and there was no evidence that the contractor had actually obtained an insurance cover.
Former ICT minister Ham Mulira, under whose tenure the deal was sealed, has defended the huge cost of the project.
He said factors must be considered such as terrain, geographical coverage, fibre capacity to meet the potential demand based on the size of the population, and the cost of civil works.
On the size and capacity of the 24 core cable, as compared to that of MTN of 48 core and Rwanda of 90 core, Mulira argued that once the fibre is laid, the traffic capacity can be increased by changing the devices that send the traffic.
Ultimately, it is meant to link Uganda to the submarine cable on the East African coast and provide faster and cheaper internet access.
The Inspector General of Government (IGG), Raphael Baku, gave the go-ahead in a letter to ethics minister Nsaba Buturo earlier this month.
Last August, President Yoweri Museveni had tasked Buturo to oversee the investigations into complaints raised about the project.
Baku explained that the project was being implemented by the time the complaint was registered with his office. “The complaint which was raised was whether the second phase should go on,” said Baku.
“We saw no problem with it if the damages (on the first phase) could be repaired concurrently.”
The IGG argued that the Government would incur more costs if it cancelled the project.
Baku also said the ICT minister did not have the capacity to monitor the implementation of the project, which led to the shoddy work.
The IGG clearance comes after the parliamentary committee on ICT issued a directive to suspend the second phase of the rpoject.
The committee vice-chairperson, Paula Turyahikayo, said they had not seen the IGG report but would hold a joint meeting with the ICT ministry and the Auditor General on the way forward.
The Auditor General in a December report found several anomalies in the implementation of the project and questioned if there was value for money.
The national transmission backbone infrastructure and E-Government infrastructure is a $106m (sh201b) project, funded by a concessional loan from the export/import bank of China.
The first phase was meant to provide connectivity to Government ministries and departments at a total cost of $30m (sh57b).
The second and third phases were meant to connect all major towns, covering 1,900 kms at a cost of $61 million and $15 million respectively.
However, investigations found that the selection of the contractor, Huwaei Technologies, was done without competitive bidding and no price comparisons were done to ensure value for money.
“By not subjecting the proposal to proper evaluation, the ministry exposed itself to the risk of high pricing and unfavourable contract terms,” read the Auditor General’s report.
The audit found that the cost of the project was inflated. The 24 core optic cable was quoted by the contractor at $3,200 (sh6m) per kilometer.
However, in a technology brief to the board of the National Information Technology Authority of Uganda, the price of the cable was quoted as $1,400 (sh2.6m) per kilometer.
In addition, the audit found that the 24 core cable is of lower capacity than what private companies such as MTN and the Government of Rwanda laid at a much cheaper rate. It also questioned the capacity of 24 core cables to meet the under-water bury standards.
The audit further found that there was poor supervision of the project and that key implementation guidelines were not adhered to.
According to the report, the cables were placed too close to the road. Also, the depth was less that the recommended 1.5 metre and the distance from the middle of the road was found to be less than the 15 metres recommended.
There were also serious delays in the project, the Auditor General noted. Implementation of the three phases was supposed to be completed in 27 months, or by January 2009.
“However, 38 months later, the first phase, originally to be implemented in six months, has not been fully completed.” The delay is expected to lead to further administrative costs.
Already, the company has claimed $2.2m in additional costs for repairs on the first phase. The permanent secretary of the ICT ministry argued that the damages occurred after the hand-over of the network and could therefore not be covered by the insurance.
But the Auditor General observed that there was no independent assessment of the extent of the repairs, and there was no evidence that the contractor had actually obtained an insurance cover.
Former ICT minister Ham Mulira, under whose tenure the deal was sealed, has defended the huge cost of the project.
He said factors must be considered such as terrain, geographical coverage, fibre capacity to meet the potential demand based on the size of the population, and the cost of civil works.
On the size and capacity of the 24 core cable, as compared to that of MTN of 48 core and Rwanda of 90 core, Mulira argued that once the fibre is laid, the traffic capacity can be increased by changing the devices that send the traffic.
Major Gen Mugisha Muntu
MAJOR Gen Mugisha Muntu yesterday launched his presidential bid for the 2011 election as his supporters danced.
The crowd was mainly composed of the youth, who described Muntu as “energetic, young and an honest leader for Uganda”.
Muntu is contesting against Col. Kizza Besigye, the head of the Forum for Democratic Change, for the chance to stand for president next year.
Muntu delivered his speech in his characteristic soft but tough tone.
The candidates have three months to woo delegates to their side. In 2008, he unsuccessfully contested for the party’s presidency against Besigye who is expected to launch his campaign today.
Present at Muntu’s rally was former East African Community secretary general and FDC vice-chairman Amanya Mushega, Maj. John Kazoora, opposition chief whip Kassiano Wadri and many MPs. Also present were youth leaders from the Democratic Party and the Uganda Peoples Congress.
The 300-capacity main hall of Pope Paul Memorial Hotel, where the meeting took place, was full.
Introducing Muntu, the master of ceremonies described Muntu as a selfless leader.
In his speech, Muntu portrayed himself as the fresh face of the political campaign and a candidate who would unite Ugandans.
If elected, Muntu promised “an honest and responsible leadership that reflects the aspiration of the people of Uganda”.
He decried what he called a dying health system, the poor standard of education and high level of poverty.
He also condemned corruption, saying it “has eaten to the core of our politics”.
“Enough is enough, nabikoowa (I am fed up); let all rise up and fight for our country,” he said, drawing applause.
He challenged Ugandans to come out and vote for a leader who would end the biting poverty, boost agriculture and fix the economy.
“This campaign is not about us, it is about our children, about their future, about the future of this country,” he said.
The retired army general promised to rid the country of military influence and to build public institutions.
Muntu avoided direct attack on Besigye. Saying that “Besigye has tremendously sacrificed for this country and we appreciate that,” Muntu added though that “we should not fear change and change is inevitable.”
Who is Muntu?
Muntu was born in October 1958 at Kitunga village, Ntungamo district, to the late Enock Ruzima Muntuyera and Aida Matama Muntuyera. He had an affluent childhood as his father was a strong UPC government functionary and close friend of former president Apollo Milton Obote.
He attended Mbarara Junior School, Kitunga Primary and Kitunga High School, later renamed Muntuyera High School. Muntu went on to graduate in political science from Makerere University.
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