Is World Bank losing faith in $125m transport project?

Distressed by alleged corruption at the ministry of Works and Transport, the World Bank is considering cancelling a $125 million (Shs 468.8bn) grant meant to improve transport on Lake Victoria as well as upgrade access roads to the lake, writes SADAB KITATTA KAAYA.

The project, Lake Victoria Transport Program (LVTP), was developed as an alternative multi-model route to the sea via the central corridor in Tanzania.

It is meant to benefit 17 districts bordering the lake. According to a due diligence report compiled by Maritime and Transport Business Solutions (MTBS), a consultancy firm that was contracted by the World Bank to conduct a feasibility study, besides supporting the road networks in these districts, the World Bank was also going to provide 11 ships connecting all the islands to the mainland.

Six of the ships are planned to dock at the Port Bell pier while five will connect the islands with the mainland at the Jinja pier. Both the Port Bell and Jinja piers were planned for upgrade at a cost of $60m (Shs 225bn), which is intended to boost trade between the two piers with Mwanza in Tanzania and Kisumu in Kenya.

Once upgraded, the two ports will provide the same capacity as the proposed Bukasa port in Kira municipality. The World Bank is, however, considering dropping the project since the ministry of Works and Transport is not warming up to it, according to our source.

A source at the ministry said a junior minister is reported to be favouring a more costly 350m euros (Shs 1.54 trillion) project for the construction of the Bukasa port, which is to be implemented by German firm, Gauff GmbH & Co. Engineering KG in association with M/S Gauff Consultants Uganda Limited.

According to the general framework agreement that the firm signed with government on November 21, 2015, Gauff Engineering is the project’s technical consultant, manager, procurement agent and technical assistant for operation and training to the ministry of Works and Transport to develop a new shipyard, container port, and surrounding infrastructure at Bukasa.

The money for this particular project is going to be acquired through a commercial loan sourced by the investor and guaranteed by the government. According to a technical brief on Lake Victoria Transport Program, the World Bank raised questions over government’s intended investment in the construction of the Bukasa port on grounds that the project does not fall within the prioritized sectoral investment plan of the transport sector, and is thus inconsistent with Uganda’s fiscal space.

The World Bank also says the 292,000 tonnes quoted in the draft master plan for Bukasa port as the trading volume going north-south to Tanzania by 2015 was grossly exaggerated since in 2014, only 1,471 containers were handled in Dar es Salaam for Uganda.

“The demand will grow certainly but it will not grow overnight from the current volumes of 88,000 tonnes to the projected volumes of 2.37 million tonnes by 2020.

This is very unlikely and therefore it would render the Bukasa port project an over investment for almost the first 20 years of its operation. This would represent lost money to the county as the opportunity cost would be…” the technical brief further stated.

When a team from the World Bank visited Bukasa in 2015, it noted that the proposed development would jeopardise the mangrove swamp, and part of a protected forest reserve.

Given the very low current and modest traffic projections, the scale of required investment, the non-optimal location (requiring considerable capital and recurrent dredging), and the environmental and social issues, the World Bank team declined to consider this initiative for funding.

sadabkk@observer.ug