[AfricaRealities] The EastAfrican - 16 minutes ago: Chinese firm goes to court over Uganda's railway project.

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Subject: [rwanda_revolution] The EastAfrican - 16 minutes ago: Chinese firm goes to court over Uganda's railway project.

Chinese firm goes to court over Uganda's railway project.

By JULIUS BARIGABA.
The EastAfrican - 16 minutes ago.
Posted Saturday, August 9 2014 at 18:06

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.

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.

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.

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.

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

Instead, CCECC would be given the contract to build the western route
of the railway from Kampala to Kasese, which was not part of the MoUs.

Besides this shabby treatment, the company claims that it had invested
Ush50 billion ($19.3 million) on feasibility studies for the routes
covered under its MoUs with the Uganda government, fully sanctioned by
the Attorney General, Peter Nyombi, who also advised against
termination of CCECC's MoUs, according to official documents obtained.

However, on April 8 this year, Mr Byabagambi terminated CCECC's MoU
for the Tororo-Pakwach-Gulu line, saying that it was not binding.
CCECC lawyers argue that once the Chinese firm undertook to do
feasibility studies, which the government received as a sign of
commitment to undertake the projects, Kampala committed itself the
argument that the MoUs were not binding was then invalid.

READ: Railway project hits fresh barrier in Uganda as Kenya lays foundation

More significantly, the president becomes a key player now as Mr
Byabagambi says in a June 15 sworn affidavit that he terminated the
agreements with CCECC under a presidential directive.

"In further response thereto, I have not acted on this process
unilaterally as H.E the President of the Republic of Uganda and the
summit members have been giving direction as clearly shown in annexure
B," he says.

Although the said annexure -- a July 2, 2013 letter by President
Museveni to Prime Minister Amama Mbabazi on railway infrastructure --
does not direct Mr Byabagambi to terminate CCECC's MoUs, it raises
further questions of corruption in the projects and the multiplicity
of agreements between the government and Chinese firms for the same
railway projects.

But the significant question President Museveni's letter raises is
that of financing, and is loaded with undertones of frustration as to
why Uganda's SGR remains on paper, while Kenya has already covered a
lot of ground on projects agreed on the same dates, with a similar
completion deadline.

President Museveni's letter was triggered by Transport Minister
Stephen Chebrot, who wrote to the president seeking a way out of the
impasse.

"Before we go for a win-win solution suggested by Dr Chebrot, Hon
Byandala should answer the question: If some companies fulfilled their
obligations under the MoU and on time, why had the project not
progressed by the time I came in with the Engineering Brigade of the
UPDF and, later on, with the CHEC people? After that answer, then we
shall see the way forward," reads President Museveni's letter.

China's ambassador to Uganda Zhao Yali also cited financing hurdles
when The EastAfrican sought comment last Thursday on the bickering
Chinese companies that were costing Uganda a lot of time, projects
running behind schedule and how this would be resolved.

"The financing for the projects is important; you have to know where
you can get the money. I am not ready to give comment right now
because the Uganda government is in consultation with the Chinese
companies that are contracting the railway project. But the financing
is important," he said.

In the meantime, as the blame game goes on within government
departments, namely the Ministry of Works, Attorney General's
Chambers, the Office of the President, Uganda People's Defence Forces,
all pointing fingers at each other for flouting fair play rules,
lawyers are watching the developments, and taxpayers will soon or
later pick the bill for the litigation that will arise out of this
mess.

CCECC has already won round one after getting an injunction on July 14
against the Attorney-General preventing him from terminating its MoU
for the lucrative Tororo-Pakwach-Gulu railway line, which will
eventually link up with South Sudan's line from Juba.

http://www.google.ca/gwt/x?gl=CA&hl=en-CA&u=http://www.theeastafrican.co.ke/news/Chinese-firm-goes-to-court-over-Uganda-s-railway-project-/-/2558/2413758/-/1uj35fz/-/index.html&source=s&q=Chinese+firm+goes+to+court+over+Uganda's+railway+project+The+East+African&sa=X&ei=PFjmU_TbE8KXyAS_toDwDw&ved=0CBcQFjAA

--
SIBOMANA Jean Bosco
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