Uganda's Karuma Hydro Project Clears Funding, Legal Hurdles

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Uganda's Karuma hydropower project on the Nile River has been fraught with problems, including funding and contract difficulties. The funding problem was solved when the country's president, Yoweri Museveni, intervened in March this year and obtained an offer from China's state-owned Sinohydro (SSE:6019) (Beijing) to undertake the project for $1.65 billion, which was down from the original estimate of $2.2 billion.

The contract for the project was initially due to be allocated in May 2012, with the start of construction following in June 2012. However, the project was stalled for a year, being encumbered by a legal suit, procurement flaws, and intervention by the office of the Inspector General of Government (IGG), which ordered fresh bidding.

State-owned China Water and Electric Corporation (CWEC) (Beijing) had been the front-runner to win the contract, but it was disqualified after it was discovered that the company had used falsified information on bidding documents. Other international companies had been in the bidding, after the feasibility study being completed in 2010 by India's Energy Infratech Private Limited.

The IGG reported that Uganda faced a huge risk of failed executions and consequent losses to the taxpayer if the contract for the project had been awarded to the CWEC.

With Sinohydro now contracted at the agreed price, the company was awarded the engineering, procurement and construction (EPC) contract for the 600-megawatt project in late June 2013. The scope of the contract covers construction of the hydropower plant and an associated transmission line. The Ugandan Energy Ministry has promised to fast-track construction to expedite the delivery of power.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.