The East African Court of Justice has ruled against the Ugandan government in a case disputing the awarding of a contract to build the 600MW Karuma hydropower dam.
The EACJ Appellate Division delivered the judgment on February 29, saying the government disrespected its own domestic law — in particular, the Public Procurement and Disposal of Assets Act — and was also in contempt of court.
Henry Kyarimpa, a procurement consultant, had challenged the contract being awarded to Chinese company Sinohydro Group.
Mr Kyarimpa made reference to EACJ’s First Instance Division Trial Court in 2013 challenging the government’s actions in hand-picking Sinohydro to construct the Karuma hydropower dam and transmission lines.
However, Mr Kyarimpa lost at the trial court based in Arusha, Tanzania, but successfully appealed.
“The selection and subsequent singing of the memorandum of understanding between the government of Uganda and Sinohydro was inconsistent with and an infringement of sections 6(c), 7(2), and 8(1) of the Treaty,” reads the appellate court’s judgment.
In March 2013, the government asked for tenders to construct the dam but later cancelled the process before even opening the bids.
The government was acting on the basis of a recommendation made by the Inspectorate General of Government (IGG) to cancel the bidding process because of lack of transparency and integrity.
However, legislator Baryayanga Aja went to the High Court to challenge the government’s decision to cancel the bidding process. Specifically, he asked the court to stop implementation of the IGG’s report and to continue evaluating the bids.
The High Court issued a final order in May 2013 restraining the government from taking into account the IGG’s recommendations, and to declare the best evaluated bidder to construct the dam.
However, the Ministry of Energy ignored the court order, cancelled the bids, but did not issue fresh bids. In June, 2013, the government signed a memorandum of understanding with Sinohydro.
The firm is expected to build a power station at a cost of $1.38 billion as well as a transmission line from Karuma to Kampala at $287 million. The first 200MW is slated for commissioning in April 2018.
Attorney General Fred Ruhindi argued that the project was a bilateral agreement, and it was agreed that the contract should be given to Sinohydro if Uganda was to access a loan from China’s Exim Bank for the construction.