{UAH} How Energy sector Mafia framed REA into Sh 40bn fraud

The plan to cheat the Ugandan tax payer was laid out by mafias running the show from the offices of African Development Bank (AfDB), all through Rural Electrification Agency (REA) up to the PPDA Board. Execution of the plan was lethal and took management of REA an entire 2 years to prevail over the mafias.

It all begun in on 4th November, 2015 when the Government of Uganda signed a loan agreement with AfDB to finance the Uganda rural Electricity Access Project worth an equivalent of US$ 100 million with REA as the implementing agency. The purpose of the loan was for providing reliable and affordable electricity to rural Uganda households, public infrastructure services (schools, health centers and administrative offices) as well as Small and Medium Enterprises.

With support from AfDB officials in the Kampala office, mafias planned to execute successful bids for construction of power infrastructure under 7 lots (procurements) in which the tax payer lost US 17.5 million. On 23rd February, 2018, REA led by its Executive Director, Godfrey Turyahikayo submitted to AfDB, procurement evaluation reports to allocate 6 lots under the UREAP project.

In the report to AfDB seeking for a no objection leading to signing of contracts, the recommended Best Evaluated Bidders was US$ 43.8 million against REA's cost estimate of US$ 61.3 million. Look at the contradiction; 3 companies being the best evaluated bidders had offered to do the job for $43.8 million against an inflated $61.3 also made by REA engineers who had worked under hand with mafias to over estimate what is supposed to be reasonable cost.

The Executive Director of REA found himself between a rock and a hard place. He faced an AfDB that was not willing to give the job to any of the 3 companies that had passed technical evaluation and presented the lowest cost bids. In fact, to knock out the 3 companies would have the effect of the tax payer loosing up to $17.5 million. After pressing AfDB with numerous letters asking for their opinion on these low cost companies, the ED was informed in a reply to his letters in which AfDB was changing the evaluation criteria to favor the high cost companies leading to the said loss. The Bank wanted strict compliance with the issue of general experience. The effect of these changes by AfDB was that a good number of bidders including the 3 best evaluated bidders with adequate specific experience (5 years) but less than 10 years of general experience but had the lowest cost bids.

L&T was awarded the contract based on a No Objection by AfDB after their main competitor C&G had been eliminated. There was escalation of prices after carrying out a post qualification leading to a final price of $53.1 million, leading to a saving of US$ 8.2 million.   

In a meeting with AfDB on 28th August, 2019, Mr. Godfrey Turyahikayo the REA ED raised the issue of lack of AfDB flexibility on waiving the 10 years general experience which would have benefited other companies like C&G. It is not true that the ED caused financial loss to government by awarding the contract to L&T.

In all, there seems to have been a mafia drive right from the donor's technical people up to the REA engineers who made the Bills of quantities, the basis of which the Bank wanted the contract price was allowed to escalate from the initial best evaluated bids.

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