Uganda’s planned 660MW Karuma Hydro Power Station has run into early trouble with police investigating allegations of possible bribery in the project, whose estimated contract value is $1.6 billion.

The EasAfrican has learnt that members of the 12-man bid evaluation committee appeared before the Special Investigation Unit of the police last Tuesday, to respond to allegations that they had pre-qualified a Chinese firm with doubtful credentials after some $1.2 million changed hands.

(Read: Donors query Uganda on excess capacity in Karuma dam)

It is further understood that as part of the continuing fallout from the flawed bid evaluation process, three members of the committee are writing a minority report that is at variance with the majority position that favoured the inclusion of the Chinese firm among the three pre-qualified bidders from which a contractor for construction of the power plant will be selected.

While a senior figure in the Ministry of Energy declined to comment on the developments “because I have heard the same rumours but I don’t have specific details at the moment,” he confirmed that members of the evaluation committee had indeed been questioned by police in relation to the allegations. Police are trying to establish the circumstances under which the China International Water and Electric Corporation, CWE, made it to the final list, despite glaring inconsistencies in its bid documents.

According to documents that The EastAfrican has seen, in August 2010, the Ministry of Energy sent out a request for proposals for the construction of the Karuma power plant. Among the key conditions for eligibility was a requirement that the contractor demonstrate that it had undertaken works involving construction of an EPC project with an underground power house, a total tunnel length of at least 20 kilometres with a suitable excavation technology and a generation capacity of 600MW or more. The bidders were also required to demonstrate they had handled three similar projects in the past five years.

Six firms, among them Sino-Hydro, China International Water and Electric Corporation, Iran Par Light, Salini, Vince (in partnership with Group 5 of South Africa) and Egypt’s Orascom submitted bids for the engineering procurement and engineering contract for the project.

After evaluation, Sino-Hydro, CWE and Iran Par Light were pre-qualified ahead of final selection of a winning bid. The CWE bid however, raised eyebrows after it emerged that some of the claims it made in its bid documents about its experience were in conflict with facts about the same projects from other sources, including its own website.

For instance, whereas CWE claimed to have constructed the QingShan Hydropower Station to a capacity of 640MW supplied by four generation units, the takeover certificate signed by the station’s operator on June 26, 2006, puts the plant’s capacity at 20MW supplied from two units of 10MW each. CWE also claims the contract was worth $351,650,213 when actual cost was in the region of $20 million.

CWE’s claims

In it bid documents, CWE also states it designed and commissioned the 300MW Moinak Hydropower Station in Kazakhstan, where it claims to have tunnelled to a length of 21 kilometres. However, on its website, CWE states a tunnel length of only 9.2 kilometres. For the Daingjiang-2 hydropower station, CWE claims a capacity of 600MW and a 26-kilometre tunnel whereas supporting documentation for the project indicates an installed capacity of only 70MW and a 1.2 kilometre long tunnel. Contrary to the $315,560,827 it assigns the contract, the actual project cost just $63,392,116.

For the 40.5MW Leiyang power station that it claims to have built in China, CWE assigns a capacity of 405MW and cost of $260,521,125 in the bid documents it submitted to Uganda, rather than the actual cost, which was $68 million. Closer home in Sudan, CWE claims to have been the main contractor of the 120MW Merowe power station, whereas available information indicates that its partner in the joint venture, CCMC, was the actual lead contractor. These inconsistencies have led to fears that if CWE were to get the Karuma contract, the whole project would be at risk.

Karuma is intended to forestall a possible return to massive electricity rationing and thermal generation in 2016, when demand is expected to overtake the new capacity being supplied by the 250MW Bujagali Hydro Power Station.

Speculating on options for Uganda in light of the tendering scandal, the senior Ministry of Energy official suggested that to avoid delays that would be associated with re-tendering and “a possible return of the same issues,” one solution would be to proceed with the evaluation process normally and then disqualify CWE and blacklist it from future participation in Uganda projects. This would be the prudent course given the importance of this project to the national economy,” he said.

That would leave only Sino-Hydro and Iran Par Light in the race, but with international sanctions hanging over Iran, it would be foolhardy to trust the latter firm with a huge tender at the moment.

The new turn of events appears to vindicate earlier concerns expressed by Western donors, who were baffled by Uganda’s refusal to involve them in the procurement process for Karuma Hydro, even when the advice was offered free of charge.

(Read: Uganda ignores donor concerns on Karuma)

(EDITORIAL: Karuma dam: Is it wise to lock out donors?)

When contacted, however, Assistant Commissioner Electrical Power Division Henry Bidasala, a member of the committee that is under investigation, said the project was progressing well and was halfway through the bidding process. The suspect committee is made up of representatives from the Energy, Finance, Works, Water and Environment Ministries. 

Additional Reporting by Esther Nakkazi