Construction of Karuma, Isimba dams runs into another legal battle

Saturday May 14 2016

Uganda’s deal with the Chinese government to construct two mega hydropower projects is running into a mire of litigation.

This time, it is a new public interest suit questioning the viability of multibillion-dollar projects and the loan repayment arrangements. This comes after a leaked report indicated engineering defects and corruption in the procurement process.

The suit by a private citizen is in respect of the 600MW Karuma and the 183MW Isimba dam on the River Nile. Two Chinese state-owned corporations — Sinohydro Corporation Ltd and China Water & Electricity Corporation (CWE), were awarded the contracts for the construction of the dams and associated transmission lines respectively.

China’s Export and Import Bank of China (Exim Bank) is bankrolling the projects.

READ: Museveni takes over Karuma power project, gets funding from China

A Kampala lawyer and procurement consultant, Henry Kyalimpa, filed a public interest suit at the High Court in Kampala on May 9, against the Attorney-General of Uganda, Sinohydro Corporation Ltd, CWE, EXIM Bank and Uganda Electricity Generation Company Ltd (UEGCL).


UEGCL is the overseer of the project. It contracted an Australian company, ILF Consulting Engineers, that the report — Advisory Review and High Level Independent Audit of Karuma and Isimba — which shows poor workmanship, lack of skills and personnel among others.  

The report notes that even as construction is ongoing, cracks are visible on the spillways. It notes that the project lacks supervision and monitoring while the contractors are using substandard materials. The report also points out that financial accountability remains wanting.

READ: Uganda’s energy officials trade blame over Karuma and Isimba dams

“The plaintiff seeks against the defendants jointly, declarations and orders to the effect that an independent engineering, financial and value for money audit be commissioned to determine the quality of works, progress and viability of the Karuma  and Isimba hydropower projects,” Mr Kyalimpa’s suit papers read.

In addition, the case filed through Nyanzi, Kiboneka & Mbabazi advocates implores the court to issue consequential orders intended to correct the defects or to discontinue the two projects.

The defendants are yet to file their responses.

A senior official at the Attorney General’s chambers in Kampala who requested anonymity said the office was yet to be served.

The latest suit follows a recent judgement by the East African Court of Justice (EACJ) issued in February against the Uganda government for disrespecting its domestic procurement laws — the Public Procurement and Disposal of Assets Act (PPDA) on the one hand and contempt of court on the other when it awarded the contract to Sinohydro.

“The upshot of our consideration of this aspect is that the procurement of Sinohydro to construct the Karuma dam was in contravention of the internal laws of Uganda. We find in this case that such conduct by the respondent [Uganda] offended the principles of the rule of law, transparency and accountability encapsulated in articles 6 {d}, and 7{2} of the EACT Treaty,” reads the EACJ judgment.

READ: EACJ rules against Uganda in Karuma dam deal

Bilateral agreement

At the EACJ, the AG defended the government’s action based on a bilateral agreement and supported by an MoU. It was agreed that the contract be awarded to Sino-Hydro in order for Uganda to obtain an Exim Bank loan for construction.  

However, no MoU was filed in court as evidence. While the court in Arusha was hearing the Sinohydro case, Uganda was at the same time awarding another contract to CWE under similar circumstances.   

Last month, President Yoweri Museveni ordered the suspension of three senior officials in the Energy Ministry in relation to the negative reports emerging from the two projects.

“In effect, the implementation and continued execution of the two projects with special reference to withdrawal of funds to finance the projects are illegal and unlawful. Additionally, the financing arrangement for projects between the government of Uganda and the Exim Bank are equally unlawful,” reads the plaint before the High Court.