Kampala, Uganda | THE INDEPENDENT | A meeting convened by the Speaker of Parliament Rebecca Kadaga to resolve the US $42M payment dispute for Isimba Dam construction ended in counter accusations between the officials of China International Water & Electric Co and Uganda Electricity Generation Company Limited-UEGCL.
The Tuesday afternoon meeting that was attended by Finance Minister, Matia Kasaija, summoned by Kadaga over the controversy of the regarding bridges that are supposed to run from Kayunga to Kuva island and another from Kuva island to Kamuli side. The speaker has severally demanded for answers from the Finance Ministry why the works on the bridges have stalled.
During the meeting, Xia Neihang, the Isimba dam project manager and executive from China International Water & Electric Co accused the finance ministry of unfairly withholding the payment of US$28M ever since the dam was commissioned in May last year.
He said 85% of the bridge is complete and the outstanding works are due for completion on three months period pending the release of funds. However, Harrison Mutikanga, the UEGCL executive director noted that the contractor should have constructed the bridge on top of the dam, but since he had neglected to do so, he had to incur extra costs for a new bridge.
He also revealed that the contractor was informed that he was eligible to apply for an advance of the US$14M in line with their contract provided he produced a retention money guarantee in accordance with Bank of Uganda requirements. He emphasized that the guarantee was supposed to be irrevocable and unconditional.
Kasaija noted that the total project cost is US$ 567.7M, adding that government has so paid US$525.3M representing 92.5% payment. He said the balance is US$42.3m which is under the defects liability period. However, Xia couldn’t have any of this noting that only US$ 14m was part of the defects retention money and his company was entitled to the balance of US$ 28m.
In his response, Mutikanga noted that there are a number of issues that need to be resolved before the contractor can earn all the money. He argued that US$ 28.3m had been retained by the employer owing to a number of defects in the works.
He noted that in March 2019 when the government took over the dam, the contractor was supposed to have cured the defects by September 2019, which they identified while running the plant. Mutikanga also revealed that there was outstanding scope of works like the visitors area.
However, Xia insisted that according to the contract, his company was entitled to 95% payment having completed the works. He explained that the defects liability amount is meant to be only 5% of the total contract amount saying the government’s conduct was unacceptable.
The meeting agreed that the Ministry of Energy writes to the Solicitor General for legal interpretation to help sort the impasse. Kadaga asked how the contractor would be able to present their side of the story.
Mutikanga noted that the contract provides for a dispute adjudication board that has a representative of both parties and a neutral member agreed by both parties to solve any dispute that may arise.
The parties agreed that Kadaga writes to the energy ministry asking the Permanent Secretary to seek the Solicitor General’s legal interpretation of the impasse and demand a response within two weeks.
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