Karuma Dam at 8% Completion

With only 8% of the work done one year after its commencement, the manager of Karuma Hydro power project is optimistic that the project will meet the five year deadline. In July last, Sino Hydro Corporation, a Chinese firm was controversially awarded the contract to construct the 600MW dam.

President Yoweri Museveni commissioned the construction work in August 2013. However, a year and two months after the ground breaking ceremony, the company is still doing preliminary works such opening up access roads, tunnel, and ventilation and power house. Excavation Works on the right bank of the river for the diversion channel have also just begun.

Song Yijun, the project manager admits there was a delay due to lack of funds. The government of Uganda co-finances the project by up to 15% while china contributes the remaining percentage through a loan from Exim Bank. The Uganda government has already released its contribution for the co-funding but Exim bank is yet to release the remaining funds.

Simon D'Ujanga, the State Minister for Energy says the loan is awaiting approval by parliament but there are reports that China is hesitant to release the money. Andrew Aja Baryayanga, Kabale municipality MP who first dragged government to court over procurement of the project contractor says the government of China is no longer comfortable with the arrangement.

According to Baryayanga, China is hesitating because of the court case at the East African Court of Justice challenging the manner in which Sino hydro was procured. In 2013, a concerned citizen Henry Kyarimpa dragged government to the East African Court of Justice challenging the Memorandum of Understanding that was signed between the Republic of Uganda and People's Republic of China to construct the dam.



Through his lawyer Mohammed Mbabazi, Kyalimpa contends that, the act by government of awarding a contract for the construction of the dam to China was done outside the procurement process which is an infringement of the Treaty for the establishment of the East African Community.

He also accuses the Ugandan government of ignoring Court orders against the cancellation of the previous procurement process which is tantamount to violation of the rule of law. Baryayanga adds that China will no longer extend the money in form of a concessional loan like was agreed initially.

He says that only 45% of the loan will be concessional while 55% will be commercial which he says will attract a high interest rate. He argues that “Karuma power might even be more expensive than Bujagali because it will be expensive to pay back the loan since it will attract a high interest rate.”

D'Ujanga agrees that 55% of the loan is commercial and says that was the initial arrangement.But the same ministry said after signing the memorandum of understanding that the funds are a soft loan which will be financed at an interest rate less than one per cent.

Government said that power tariffs would decrease after the completion of Karuma dam which was initially supposed to be fully financed by government with funds from oil and the energy fund. Yijun also attributes the delay to the land wrangles which he says took long to resolve.

He says that up to now there are still squabbles with part of the land where the power in take plant, the aggregate plant and the concrete batching plant are supposed to be built.

The minister says the issue was complicated since there were two groups of people demanding compensation; the squatters and the real land owners. But he says that court recently disposed of the case and government gave money to court to pay it to the deserved owner.

The total land required for the dam is reported to be 465.5 hectares. While most of it lies within the Karuma wildlife reserve, about 193 hectares was occupied by the locals in four villages in Kiryandongo and Oyam districts.

The residents dragged government to court in 2013 and demanded that work on the project be halted until the land issue was resolved. Plans to construct Karuma dam go as far back as 1995 but almost 20 years later, no significant work has been done on the project.

The 600 MW dam, the country's biggest project by far, is expected to offset power supply constraints with the country's power demand growing at 12% per annum.