Business

How court cases forced Chinese bank to hold back Karuma funds

president-yoweri-museveni-wit-chinese-investors-at-the-ground-breaking-ceremony-of-isimba-hydro-power

President Yoweri Museveni wit Chinese investors at the ground breaking ceremony of Isimba hydro-power

The Export-Import Bank of China [Exim] has reportedly withheld millions of cash meant for Karuma and Isimba hydro-power projects until legal disputes in Ugandan courts about the said projects are resolved.

A concerned Uganda, Herry Kyarimpa, also a procurement consultant, filed a petition in court challenging the contracts awarded to Chinese companies Sinohydro Group and China Water and Electric (CWE) to build the two power dams.

Now the Chinese bank has written to the Ugandan government seeking explanation as regards the documents of due diligence on Karuma and Isimba dams which confirmed the tendering process had been properly concluded yet the power projects are now a subject of litigation in court.

Wang YuMeng, the Export-Import Bank’s deputy regional director for Africa is said to have written to Uganda’s secretary to the treasury, Keith Muhakanizi, on September 7 about the issue.

YuMeng made a reference a petition filed in court challenging the contracts awarded to Chinese companies Sinohydro Group and China Water and Electric to build the two power dams.

The bank was listed as a fourth defendant in the petition filed by Herry Kyarimpa, a procurement consultant.

According to YuMeng, the money will be released for completion of the project if the ministry of finance properly coordinates with key parties to resolve the court case.

Projected to produce 600MW, Karuma dam contract was awarded to Chinese firm Sinohydro in June 2013, starting construction in December the same year.

The project is expected to be commissioned in December 2018.

China committed to finance 85 per cent of the dam’s $1.6b (Shs5.6 trillion).

Uganda borrowed Shs1.435b (Shs4.8 trillion) from China’s Exim Bank and obtained the balance from the country’s Energy Fund.

Isimba Hydropower Station is a 183 megawatt venture worth $570 million (Shs1.4trillion). It is being constructed by China International Water & Electric Corporation.

The project is financed by a loan from China’s Export-Import Bank after Parliament gave government a nod to borrow $482.5 million (about Shs1.4 trillion) from the bank at two per cent annual interest repayable over 20 years.

Uganda will contribute the remaining $107 million.

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