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KCCA could lose $288m grant over questionable Chinese contractor

KCCA executive director Dorothy KIsaka during an impromptu visit to check on the road works progress in Kampala

KCCA executive director Dorothy KIsaka during an impromptu visit to check on the road works progress in Kampala

Kampala Capital City Authority (KCCA) executive director Dorothy Kisaka’s grand dream to turn Kampala into a smart city has hit a snag due to KCCA’s failure to pronounce itself on the status of a controversial contractor, China State Construction Engineering Corporation (CSCEC), The Observer has learnt.

At stake is a $288m (about Shs 1 trillion) grant from the African Development Bank (ADB) to reconstruct city roads but the sticking point revolves around the competence of CSCEC, whose recent works leave a lot to be desired.

On April 11 when Kisaka lambasted CSCEC over shoddy work on John Babiiha avenue during an impromptu check, her frustration was not spontaneous.

The Observer understands her ire had been boiling for some time through several correspondences that left KCCA and other stakeholders frustrated.

Although CSCEC promised to rectify the faulty issues Kisaka raised, it may not be able to atone for the three-month delay in completion of the work, which continues to inconvenience Kampala road users. And now, The Observer has learnt that Kisaka is in a tricky situation to pronounce herself about the competence of the very company, which recently won a $288m bid to reconstruct several Kampala roads.

The project funders, World Bank (WB) and African Development Bank (ADB), have already expressed concern about CSCEC’s capacity and capability basing on the recent reports of the contractor’s incompetence.

In fact, a senior engineer with the ministry of Works and Transport who preferred anonymity says the development partners want the bidding process repeated in the wake of CSCEC’s poor record in the country. They specifically raised concerns on the company’s non-compliance with the contract terms and conditions on several road works in the country.

However, this possesses legal challenges for the project and could delay its implementation, something Kisaka may want to avoid. So, KCCA is torn between recommending CSCEC to hasten the project implementation or exposing its incompetence and delay in implementation of the project.

Conspicuously, KCCA is also supervising CSCEC’s ongoing road works without any performance report, which means that there is no reflection of the progress of works yet this is a must for any undertaking.

“This is the clearest sign of corruption in KCCA because performance reports act as the indicators of progress and a contractor’s capability…in other words, absence of such a report indicates that some individuals within are either extorting money from the contractor or they are sleeping on their job. That is why Kisaka has an uphill task to understand the magnitude of CSCEC’s dealings with her staff,” a ministry source added.

Efforts to reach out to Kisaka for a comment were futile because she didn’t respond to our calls. Amidst all this uncertainty, ADB and WB may pull the plug on the funding, according to reliable sources.

Meanwhile, a CSCEC official who picked our call on the company’s official number preferred anonymity but said he could not speak about any issues with the media.

Background

Gen Katumba Wamala, the Works and Transport minister, was the first to raise a red flag on CSCEC for doing shoddy work on the 73km Kapchorwa-Suam road under the Uganda National Road Authority (Unra). In his February missive, Wamala expressed the ministry’s disappointment with the Chinese company for slow progress on the upgrading the road from gravel to paved (bituminous) standards.

A report by supervisors indicted that CSCEC’s percentage financial progress lies at 31 per cent against planned 65 oer cent while the physical progress achieved so far was 31% against planned 72%.

“Slow progress notice has been served to you [CSCEC] for the delays caused,” reads part of Katumba’s warning to the company.

Amongi steps in

On March 26, Betty Amongi, the minister for Kampala, also voiced her dissatisfaction with CSCEC over failures to undertake efficient road works in the city.

She pointed out delays in works on John Babiiha avenue, Kulambiro ring road, Najjeera link and Nakawa-Ntinda road as well as the Lweza-Bunamwaya-Kabusu road.

“The contract was signed on March 25, 2019, at a total cost of Shs 194 billion and should have been completed by last year. During our joint tour and meeting with both the contractors and supervising consultants, it was confirmed that the contractor failed to mobilize equipment contrary to what was confirmed in the bids, leading to the prolonged delays in work. They then started sharing equipment meant to undertake works on all road works,” reads Amongi’s letter in part.

Amongi also accused CSCEC of financial impropriety after the contractor failed to renew its performance guarantee with its bankers due to lack of funds despite timely payments of all previous certificates by KCCA.

“Arising out of the above, it would be important to closely monitor CSCEC to fulfil its commitment to obtain the performance guarantee within two weeks and also not to enter into further contractual obligation with the company until completion of the current works,” Amongi warned.

UNRA double standards

The Observer understands KCCA is delaying to pronounce itself on the matter because there are powerbrokers pushing to have CSCEC portrayed in good light so as to retain the $288m contract.

“There is more to this than meets the eye because several key officials in the ministry and KCCA have already been compromised to recommend CSCEC for the WB and ADB project,” a source who preferred anonymity from Works ministry intimated.

However, Kisaka, in a bid to make a conclusive report about CSCEC on top of covering any legal gaps, asked Uganda National Roads Authority (UNRA) for its position on the company’s reputation. Kisaka wanted to use UNRA's assessment as backup for her ultimate decision.

In a sharp twist, Eng Samuel Muhoozi, the UNRA director Roads and Bridges Development, contradicted Gen Wamala by providing a glowing assessment of CSCEC as a competent contractor. This further complicated and delayed Kisaka’s ultimate decision on the company, thereby leaving KCCA in a serious spot of bother.

What next?

When The Observer reached out to CSCEC, the official who declined to identify himself said the company is reviewing the status of projects with a view of forming a unified position.

“It’s true there are some aspects KCCA is not happy with but we are in touch to conclude everything in the best way possible,” said the company representative.

“We are hopeful we will complete the current works in time and also undertake the ADB project to the fulfillment of making Kampala a smart city.”

However, that the indecision of KCCA to pronounce itself on CSCEC has fueled schemes of extortion against the company. KCCA may also fail to deliver its mandate under the murky circumstances in which several powerbrokers are involved.

“This is a loan [$290m] for goodness sake and it should have been settled about three months ago; so, the delayed procurement costs government about $1.5m daily and by the time KCCA implements the project, a lot of interest will be accrued,” said an official from the Finance ministry who preferred anonymity.

“Just know this is how the government incurs heavy repayment costs on projects due to delay in implementation.”

All in all, this Shs $290m issue is just one component of government’s Shs 7.5 trillion pledge to KCCA over the next five years. Therefore, if just $290 mn has caused this kind of hullabaloo, it may not be possible for KCCA to fulfil its mandate of turning Kampala into a smart city within five years.

Comments

+5 #1 Lysol 2021-04-17 02:31
As a former employee of the City Council back in the old days, this is deplorable.

China will milk our country dry in order to feed its billion citizens back home. Unfortunately, we have greedy leaders who would rather fatten themselves like cows, instead of protecting the country's interests.
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0 #2 Oruk Charles 2021-04-17 08:12
Ugandans under Museveni, why always bring Chinese to built even toilet for us?

Are there no competent construction companies own by the indigenous Ugandans that can do the beutification of any town or cities in the country?

How many Ugandan construction companies are working in China?
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+1 #3 Webz 2021-04-17 11:22
Funders are right. Those that select the contractor simply share the loot with him/her.

We want, as much as the funders do, value for money.
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+2 #4 Paddy 2021-04-17 15:08
Talk of this Company. How about the Company that worked on the Kyenjojo-Fort Portal stretch!

As you drive from Rugombe through Kagorogoro you will not miss the bumps and the tears and openings on the road! And they have been doing patches on some parts!

Do we need a 'whistle-blower' in this case very visible? And you find the Chinese 'bosses' much of the time on their phones with Ugandans driving the equipment!

I have wondered why given the number of Ugandans, the contracts are not taken by Ugandans! For heaven's sake, how can they patch a road that is not even a year old! Where is UNRA in this?
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0 #5 Moses A 2021-04-18 13:21
Such companies should be given Red Flags and suspended from doing any construction works in the country.

This way the company will be forced to reveal the corrupt officials as well
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