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INVESTIGATION: Uganda’s $2.3bn SGR Project in Turmoil as Kiggundu, Commission Agents Mislead Museveni

Plans to have the much-anticipated Standard Gauge Railway (SGR) by end of 2021 have faced a major blow after a group of Ugandans lobbying for a Turkish construction company misled President Museveni, an investigation by ChimpReports shows.

It all started in March 2017 with President Museveni traveling to Tanzania to meet with his counterpart John Pombe Magufuli to discuss the SGR project.

Museveni was informed that Tanzania’s 1,219km railway line from Dar es Salaam to Mwanza port would cost a significantly lower price per kilometer compared to Uganda’s.

The Ugandan leader was told for every kilometer of rail, Tanzania would spend $1.5m (Shs5.6b), while Uganda’s is set to fork out $7.3m (Shs25b) per kilometer.

In short, Uganda would pay more than triple the cost per railway kilometer than Tanzania. The President was livid. On his return journey, Museveni sought an explanation.

But it appears his meeting with Magufuli changed the way Museveni perceived the Ugandan technocrats.

During the meeting in Dar es Salaam, Museveni tasked the Minister of Works Hon Monica Azuba to explain the variance.

From an investigation that this website has carried out, the team of Ugandan officials went and found many discrepancies between the two projects.

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Differences

It was discovered Tanzania had an inferior railway system that will have less reliability, safety and track availability and will require very high and frequent maintenance costs estimated at three times higher than Kenya and Uganda.

Ugandan experts noted the many variances between terrain and topography.

From the comparison of the SGR that this website published last year, Uganda has 8.8 percent of bridges on the route (Kampala-Malaba) while Tanzania has only 1. 8 percent.

For example, the planned arch bridge over River Nile will cost a staggering $82.5m

The 1 Kilometer bridge is designed to carry extremely heavy cargo. There are other longer bridges with different specifications along the route including running over River Mpologoma that is 2.4kms long.

Impression of the proposed Nile SGR Super Bridge. The bridge will be 1km long, axle loading 27.5 tones per axle with no pillarspiers in water

Tanzania is also designing for single stack containers and they have inferior embankments designed on America’s AREMA standards proven to have high costs. Kenya and Uganda have designed for double stack containers.

On the other hand, Uganda and Kenya will use the Chinese national Standard. This is a standard of the Government of China – not the contractor.

This means that Tanzania will have to shop for expensive wagons from United States yet Uganda can acquire theirs cheaply from China. For example a wagon in United States will cost the Tanzanians about $150,000 yet Uganda, which will use similar wagons as Kenya, can buy one from China at $80,000.

China Railway Rolling Stock, known as CRRC, has not only grown into the world’s largest and most competitive maker of railway equipment, it has forced mergers in Europe such as Siemens and Alstom Form to counter its growth.

Based on the superiority of China railway standards, the 4 partner states, Kenya, Uganda, Rwanda and South Sudan, under Northern Corridor Integration Projects (NCIP) agreed to adopt the China Class 1 Railway Standard.

Cost variations  

It also was established that the cost of financing was fully addressed to President Museveni.

While Uganda will borrow 85 percent from Exim Bank and raise 15 percent locally to finance the SGR project (Kampala-Malaba) to the tune of $2.3bn, the Tanzanians will raise 50 percent from commercial lenders at about 7 percent and 50 percent locally.

Uganda’s cost is inclusive of station buildings, wagons, locomotives, rolling stock, electrification and Inland Container Depots (ICDs).

The cost per route Km (excluding locomotives) will be $7.3m/KM for Uganda while Tanzania will pay $5M/KM.

Kenya’s SGR, on the Mombasa-Nairobi route, for a diesel system cost $7.2m per kilometer while for the Nairobi-Naivasha route, costs $12.3m per kilometer and the Naivasha-Kisumu route will cost $13.7m per km.

The SGR will be constructed on raised pillars to avoid intact with humans and vehicles

Due to high investment costs in railways, construction of a cheap railway means there will be high maintenance costs.

Maintenance costs for AREMA railway standards are at $150,000 per kilometer per year while Chinese standards maintenance costs are at $40,000.

Kenya and Uganda costings are based not only on investments costs but on investment and other costs associated with operation and maintenance also known as life cycle costs.

Interestingly, the President was told the cost of Tanzania’s railway was $1.5m per kilometer!

On return from Tanzania, the Ugandan experts showed the variations in costs which the President seemed to understand.

He gave them a green light to continue with their works.  But there was another hurdle to skip –commission agents.

The Plot

Late last year, a group of high profile Ugandan businessmen started lobbying for the Turkish construction giant Yapı Merkezi.

The firm, which had in 2016 completed the Eurasia Tunnel Project, an underground road link spanning Istanbul’s European and Asian sides, remains a force to reckon with in the construction industry.

On Oct. 2, 2017, Yapi signed a $1.9 billion contract to design and construct a 336-km (208-mile) standard gauge high-speed railway linking Morogoro and Makutupora in Tanzania.

Yapi’s lobbyists commenced a huge and clandestine operation to take the SGR contract which the Ugandan government had already signed with state backed China Harbor Engineering Company in March 2015.

Our investigations reveal that the Chinese contractor has done some work on the ground.

Security officials told ChimpReports Investigations Desk that Yapi’s lobbyists managed to ‘woo’ former Electoral Commission chairman Eng Badru Kiggundu to their side.

Exim Bank and SGR officials on an appraisal tour in Uganda

The 73-year-old Kiggundu is currently supervising works at Karuma Dam where UEGCL officials say he is giving them headache due to “failure to grasp basic practical engineering aspects and sticking to theories and not thoroughly reading technical reports.”

He was brought on board to streamline works at the dam after it developed cracks due to what Museveni says was “poor supervision.”

Kiggundu has the President’s ear on matters of construction. Kiggundu studied Engineering (BSc 1969) in United States where he also graduated with a Masters in 1971 from Carnegie-Mellon University and PhD in 1981 from the University of New Mexico USA.

He also was an Associate Professor, head of Department, Civil Engineering and later Dean of Faculty of Technology at Makerere University.

But Engineers whom we spoke to for this article said Kiggundu “lacks practical experience in civil engineering” to manage large scale construction projects.

Former Electoral Commission Chairperson, Eng Badru Kiggundu

It will be recalled Kiggundu supervised the hotly contested 2016 general election where many say he failed to protect the integrity of the Electoral Commission.

Sources say, the Ministry of Energy and Ministry of Works are bitter with his compromising adherence to ethical and professional standards.

“If you spend about 20 years without practicing, you rust a bit. Kiggundu used to be a good teacher of Engineering but implementation is a different matter. You can’t spend 20 years in elections and still be a relevant engineer considering that technology changes every day,” said Moses A, a Kampala-based engineer working with a prominent construction firm and a former student of Badru Kiggundu.

Efforts to reach Kiggundu on his known mobile phone were fruitless.

However, our investigations reveal that with Kiggundu convinced about the deal, Yapi further mobilised former Uganda Telecom board chairman Stephen Kaboyo, Uganda Railways Corporation boss, Charles A Kateeba, Works Minister Monica Azuba, a powerful secretary at the President’s office and a president’s associate to do their bidding for the SGR project.

It’s understood these activities are being coordinated by a one David Rwamutamba.

Nairobi Workshop

This was at first seen as a rumor until late last year when Works Ministry officials participated in a workshop in Nairobi, Kenya.

Yapi Construction Company arrived in Nairobi a few days before Ugandan officials jetted in. Tactfully, Yapi officials managed to make a presentation on the sidelines of the workshop.

The presentation was made to the Uganda Railway Corporation Boss, Charles Kateba and a one Emmanuel Iyamulemye who we have established works with the SGR Project.

Map showing where the SGR will pass on the Malaba-Kampala route

A one Dr Betru Getachew attended the meeting as part of the Yapi team. Dr Betru would later be brought to the President as a railway expert to critique the Chinese contractor. In short, Yapi also wanted to convince senior Ugandan officials it would do a better job than the Chinese.

There were other several meetings between Badru Kiggundu, a one Rusongoza, an advisor to the president and officials from Yapi in Nairobi. This website is yet to obtain what transpired in these secret meetings.

State Lodge Meeting

But that was not the end. In October 2017, Museveni called a meeting at State Lodge Gulu where the Works Minister, Azuba Monica, Kiggundu and the SGR coordinator, Kasingye were in attendance.

Kiggundu assured Museveni the SGR construction work could be “done at a cheaper rate using Ugandan standards.”

Kiggundu’s team later delivered Dr Getachew Betru, a former Ethiopia Railways Corporation general manager to convince Museveni to tow their line. Betru had earlier met the Works officials in Nairobi.

Museveni was not properly informed that Betru Getachewu Betru had joined Yapi after being sacked from the hugely indebted Ethiopian Railway Corporation due to gross mismanagement of Ethiopia Railways.

It will be remembered that although Ethiopia begun construction of the SGR three years before Kenya, the latter finished construction and commenced operations before Ethiopia. Dr Betru was the helm at Ethiopia Railways.

While Dr Betru managed to make a moving presentation, the fact that he represented Yapi’s interests was ignored.

Officials say Museveni started changing his mind on earlier positions presented by his technocrats.

Kisozi Farm Meeting

On Monday, April 2, Museveni called another meeting of Works Ministry officials where Minister Azuba, Kiggundu, Kasingye and officials from China Harbor Engineering Company discussed the issues.

Museveni has since been carrying out a series of investigations on the SGR project using internal and external teams.

It’s understood Kiggundu clashed with works ministry officials. In the same meeting, Museveni extensively interviewed the Chinese engineers who defended the Class 1 railway line.

Global competitiveness

With Commission agents in the mix, insiders tell us implementation of the project is in peril.

Uganda is currently struggling to connect with international markets due to poor infrastructure.

The railway is planned to enhance Uganda’s global competitiveness by providing a seamless, reliable, safe and efficient transport to transport exports to the sea and attract foreign direct investment.

According to the SGR website, to attract multinational corporations to create thousands of jobs, Uganda needs a superb mode of transport that would see the manufacturer transport products to the Indian Ocean in a matter of hours.

The SGR is a regional project under the Northern Corridor Integration Projects from Mombasa through Kampala onwards to South Sudan, DRC and Rwanda

Kenya has attracted globally recognized manufacturers such as Peugeot, Ashok Leyland, Iveco, and others as a result of reducing costs of production especially transport challenges.

Multinational corporations require assurance of safety of its products hence incur low insurance costs. Local producers would avoid expenses incurred in stocking of products hence producing for domestic and foreign markets on a large scale thus creating more jobs.

Kenyan has since commissioned a huge section of SGR

For example, a truck carries 28 tonnes on Ugandan roads. To export 3,000 tonnes per day, a manufacturer needs 100 trucks, drivers and helpers.  The trucks are susceptible to accidents, tear and wear and incur high fuel and insurance costs.

A multinational company such as Nescafe seeking to establish an industry in Uganda to export large volumes of coffee across the world would be constrained by the transport factor. This denies Uganda employment opportunities and constrains economic development possible transfer of skills and jobs.

 In our next investigative report, we will present more technical evidence on the plot to fail the Uganda Standard Gauge railway.

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