By Otim Nape
President Museveni has announced the indefinite suspension of the Standard Gauge Railway (SGR), a project that was ideally meant to result into Uganda’s first ever high speed railway network powered by electricity. The idea is to raise the billions required to urgently invest (over $400m) in the power distribution network, a responsibility UMEME has reneged on for years. The president declared his decision during the 3 hour meeting he had with a delegation of UMEME leaders and other stakeholders in Entebbe State House on Tuesday. We are impeccably informed it was a “very hot meeting” during which Board Chairman Patrick Bitature led a delegation that had BOD member Gerald Sendawula, COO Florence Nsubuga and CEO Celestine Barungi. Bitature, who sources said spoke very eloquently though a bit nervous, used the Tuesday meeting to own up the mess that the H/E disclosed in his Monday 12th March letter complaining about UMEME exploitatively billing Ugandans for all these years. Bitature was quoted as unconvincingly attempting to deceive the President that as UMEME they realized the need to lower the tariff the moment the IPO (which saw NSSF invest to become UMEME major shareholder) was concluded. “We needed to discuss with you on how to bring this down but it hasn’t been easy to get to you sir,” Bitature was quoted as saying as the body language of the 7 people in the meeting changed as if to say “really?” There was a bit of sarcastic laughter and Museveni said something wondering how big people like the UMEME board members could wish but fail to have audience with him on such an important matter. The President was paraphrased to have said this couldn’t happen unless the UMEME bosses weren’t seriously looking for him. He specifically said: “But I have been seeing and meeting some of you in the different foras how come you never brought this to my attention?” On realizing this narrative wouldn’t take him far, Bitature abandoned it and began submitting in a manner that showed remorse. Apart from Museveni, the seven other people at the Tuesday meeting included his PPS Molly Kamukama, an influential media entrepreneur (co-owns a newspaper) and some young man (a M7 personal confidant) who is renowned for being very outspoken on energy matters. He is actually a consultant and power broker of sorts on energy matters. On seeing the sociable equally outspoken media entrepreneur at what they considered to be a very confidential meeting, the UMEME bosses became uneasy and this was visible on their body language but Museveni calmed them down saying “he is my son and is here as a concerned citizen and not in the other [newspaper] capacity which you know him for.” Conspicuously absent was Energy Minister Irene Muloni and her Ministry wasn’t represented at all at what Museveni apparently intended to be an informal preliminary meeting generating business and talking points for the series of meetings he subsequently intends to have with UMEME officials to amicably resolve the matter.
Even when he was reportedly very courteous throughout the meeting, there was one thing on which Museveni didn’t mince his words: there will be no extension of the UMEME concession agreement after 2025 when the current 20 year period expires. In fact Museveni, who is angry seeing his hapless citizens exploited, would clearly want UMEME out of the electricity sub sector as soon as possible. The multiple sources we spoke to at the Tuesday meeting separately agreed this came out clearly: the big man won’t be available anywhere to discuss possible extension. “The upcoming series of meetings will be about how do we amicably get UMEME out of the way without attracting litigation and avoidable breach of contract expenses for the GoU,” said a UMEME official fully briefed about the Tuesday meeting proceedings.
UMEME GOOZE COOKED
Falling short of calling UMEME and their godfathers thieves, Museveni said he had taken his time and his clear findings were that the national power grid (basically the transmission network-the poles, the transformers and sub stations), through which UMEME is supposed to deliver/distribute power to the final end user, is clearly dead. This is an act of economic sabotage by UMEME that was supposed to continuously invest in the network to ensure it’s not dead. The vibrancy of the power grid is determined in terms of the distance from one power supply point (transformer) to another. The ideal thing is these transformers should be 1km apart and this is a desirable situation neighbors like Kenya achieved long time ago. And it’s how you reduce technical power losses which UMEME was supposed to mitigate against by investing in the network as per the concession agreement. They didn’t and this is why the tariff has remained high because these power losses, directly resulting from UMEME’s breach, weren’t mitigated against by UMEME investing into the network as required. Museveni wonders where the regulator (ERA) was when UMEME was reneging on its obligations all these years. Museveni’s finding is that as a result of UMEME’s omission, the Ugandan power consumers have had to pay an additional total of $4m annually for the power they consume as supplied by UMEME. These are called technical losses but UMEME stands accused of failing on both technical and commercial losses (basically things to do with network vandalism and equipment thefts etc). On seeing how comprehensively informed Museveni had become regarding these matters, the Bitature party owned up and apologized but, still unsatisfied, Museveni wondered why they waited until he wrote his correctional letter for them to come to him and own things that have gone wrong.
SUSPENDING SGR
It was in the same meeting that Museveni announced that he needs a lot of money to revive the electricity distribution grid that he insisted was now dead (transformers being 7km-as opposed to 1km-apart) and yet this is urgent. The clearly very subdued UMEME bosses said they require $1.6bn to adequately invest in the network to achieve the transformation from 7kms to 1kms distance between the transformers. Naturally, like any other business would, for that chunk of money they have to borrow from banks or institutions that fund such long term projects and yet to get any funder to give them money, there must be assurances that their concession will be extended after the 2025 expiry but Museveni implied that one they just have to forget about. But unknown to them, Museveni has his independent research report showing he needs only $400m and not $1.6bn to accomplish this job. The money would mostly go into purchase of electricity poles (be they metallic or wooden), purchase of transformers, establishment of sub stations and compensating the Project Affected Persons (PAPs). Saying he wasn’t interested in discussing UMEME’s $1.6bn, which is clearly inflated, Museveni informed his guests that this is why he is going to suspend (put on halt) the Standard Gauge Railway (SGR) project to first concentrate on ensuring electricity is affordably available for domestic, industrial and commercial use. “The SGR is about facilitating our exports but what are we going to export if the electricity isn’t affordable to our industrialists? We need to process our exports and send them out after value addition and the industrialization project needs power primarily and the SGR later,” Museveni was quoted as telling the meeting. It wasn’t readily clear how fast Museveni wants to move in that direction and knowledgeable sources said “those are now details he wants to be discussed in the subsequent series of meetings on how to amicably close off the UMEME chapter.” The next follow up meeting, that will be more formal and more inclusive of more representations, is expected tomorrow Thursday. “These are going to be marathon meetings and the H/E wants this concluded now and not next year. His people the Ugandans have suffered too much and he wants UMEME out of the power distribution chain yesterday. He is clearly impatient for results which is why these are going to be marathon meetings for now and not later,” explained a State House source. The same source explained that in calling off the SGR project, President Museveni is partly being inspired by tips he recently got from Tanzanian president Pombe Magufuli who told him how government officials always steal in such big projects by inflating figures. He implored him to interest himself with the Kenyan experience where it’s increasingly becoming clear that the Chinese officials connived with the local officials to reap off the taxpayer. Now that is even more frightening because the Ugandan cost per km ($8.2m) is even more inflated than the Kenyan one (at $7.7m).
TOTAL SGR COST
Some years ago, Museveni approved a Shs10.3tn ($2.9bn) loan from China Exim Bank to go towards the SGR project to be constructed by China Harbor Engineering Company (CHEC). It’s a 273km (169 miles) railway line meant to be fully electric. The cost per km is averagely put at $8.2m (compared to Kenya’s $7.7m) and officials led by Eng Kasingye defend this cost on grounds that the line will be passing through a difficult terrain that isn’t even uniform. That they are many adjoining bridges to be catered for along the way. Compensation of the PAPs is another very big component forcing the cost up. The fact that it’s an electric line has also been used to justify the very high cost which knowledgeable sources say a very apprehensive Museveni wants to be comprehensively looked into. This has necessitated halting the project first for the truth to be established, knowledgeable sources close to Sevo have told this news website. Originally the Chinese funders desired to have a situation where Uganda, Kenya and Rwanda would operate a joint SGR railway line. This seems unlikely because of occasional mistrust governments in these countries have occasionally exhibited on these things. The regional SGR railway network is in the long term meant to link up Uganda, Rwanda, South Sudan and Ethiopia ostensibly to boost trade. The original feasibility study had put the SGR cost at $2.3bn but along the way the figure curiously kept fluctuating, something Museveni needs time to understand. For comments, call/text/whatsapp us on 0703164755!
