Chinese firm goes to court over Uganda’s railway project

President Museveni flags off a train in Gulu, Uganda. The government is accused of awarding the tender to a Chinese firm after signing MoUs with another. FILE PHOTO 

By JULIUS BARIGABA The EastAfrican

Posted  Saturday, August 9   2014 at  18:06

In Summary

• At the heart of the dispute are several Uganda government departments and two Chinese companies -CCECC and CHEC.
• American lobbyists are behind CHEC and pushing Uganda government executives in the fight for $8 billion worth of contracts to build, upgrade and expand Uganda’s railway network to standard gauge.
• SGR is one of the components of the Northern Corridor infrastructure projects that the East African Community partner states started planning as early as 2004, but in June 2013, the presidents of Kenya, Uganda, and Rwanda agreed to fast track it, with a March 2018 deadline.

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Uganda’s plans for a standard gauge railway (SGR) are in disarray as the government must now choose between playing fair and surrendering to lobbyists’ interests.

At the heart of the dispute are several Uganda government departments and two Chinese companies — state-owned China Civil Engineering Construction Corporation (CCECC) and China Harbour Engineering Company Ltd (CHEC).

But The EastAfrican has learnt that American lobbyists are behind CHEC and pushing Uganda government executives in the fight for $8 billion worth of contracts to build, upgrade and expand Uganda’s railway network to standard gauge.

The SGR is one of the components of the Northern Corridor infrastructure projects that the East African Community partner states started planning as early as 2004, but in June 2013, the presidents of Kenya, Uganda, and Rwanda agreed to fast track it, with a March 2018 deadline.

READ: CoW now sets SGR contract signing deadline

In 1998, CCECC interested Uganda’s then Ministry of Works, Housing and Communication in a trolley bus transportation system in Kampala city, but the ministry and President Yoweri Museveni instead interested the same company in it the rehabilitation and development of Uganda’s railway infrastructure.

By 2004, the project was taking a regional outlook, and Museveni met CCECC executives in Kampala and later in 2006, in Beijing, to discuss the issue.

In 2010, Museveni asked CCECC to work with the Uganda Peoples’ Defence Forces to enable the army to develop capacity in rail construction. These engagements crystallised into three memoranda of understanding (MoUs) with the Chinese company, the first of which was signed on December 22, 2011 for the construction of a new port at Bukasa in Uganda.

The other two MoUs were signed on January 13, 2012, one for the rehabilitation and upgrade of the existing railway line from Malaba to Kampala and the other for the line from Tororo-Pakwach-Gulu and expansion to Nimule, then Juba in South Sudan.

CCECC went ahead to conduct feasibility studies for the two rail routes, and submitted them to the Ministry of Works and Transport in April 2013.

However, even as CCECC was doing the feasibility studies, a rival firm in CHEC appeared on the scene in August 2012.

Documents obtained by The EastAfrican indicate that President Museveni issued a presidential directive in September 2012 to his Minister of Works Abraham Byandala to accommodate CHEC, which was fronted by former US assistant trade representative for Africa Rosa Whitaker, in the railway and port projects, citing the group’s goodwill in Beijing to source funds for construction of the railway.

“Rosa Whitaker ... brought to us a Chinese group known as China Harbour Engineering Company that wanted to help source Chinese government soft loans to build the railways in Uganda as well as a port on Lake Victoria,” Museveni’s letter reads.

The weight of the powerful Whitaker Group forced Museveni to revise the earlier MoUs with CCECC.

On March 14, CCECC was invited to a meeting with the State Minister for Works John Byabagambi to discuss the next steps towards the final deals, only to be told that its contract to build the SGR for Tororo-Pakwach-Gulu and expansion to Nimule would be handed to another company, which had signed a new MoU with the government.