Shs 22bn scam rocks Rural Electrification Agency

A controversial $33.6m (about Shs 131bn) deal has cast a dark shadow on the Rural Electrification Agency (REA) after revelation of procurement discrepancies indicating the body could have lost $5.7m (Shs 22bn) in the bidding process.

REA is a semi-autonomous body charged with operationalizing government’s rural electrification function. Under the project dubbed Uganda Rural Electricity Access Project (UREAP), REA received funding from the African Development Bank (ADB) worth $100m for the design, supply and installation of medium voltage networks and last mile consumer connections in several districts.

The main bone of contention surrounds the procurement process that saw REA award an Indian firm, Larsen & Toubro Ltd, the contract worth $33.6m at the expense of a lower bid of $22.8m [89bn] from C&G Andijes Group Ltd, a Ugandan company. The difference between the two bids is Shs 42bn.

As a result, C&G accuses Godfrey Turyahikayo, the REA executive director, of flouting the standard procedures to award the ‘overpriced’ deal to Larsen & Toubro Ltd.

According to correspondences that The Observer has seen, Turyahikayo is accused of ignoring decisions of the REA board and instructions of the Public Procurement and Disposal of Public Assets (PPDA), to award contracts to L&T. When The Observer reached out to Turyahikayo, he refused to comment on the matter.


Shortly after REA declared the L&T bid as the best in January 2019, C&G petitioned Gen Salim Saleh, the chief coordinator of Operation Wealth Creation, for intervention on grounds that the country was set to lose billions of shillings if the deal went ahead.

“The proposed award is 100 per cent donation of about Shs 20 billion of taxpayers’ money that can be used for other urgent rural electrification needs,” reads part of the plea from Gabriel Addi on behalf of C&G.

In turn, Saleh wrote to Benson Turamye, the PPDA executive director, for an explanation on the suspected malpractices procurement of works in REA.

“This is therefore to request that an explanation to that effect be submitted urgently on what courses of action has been taken so far,” Saleh wrote on January 4, 2019.

Indeed, Turamye replied on January 19 and noted after investigating the matter, PPDA discovered discrepancies and ordered REA to re-evaluate the bids.


However, Turyahikayo disregarded the PPDA decision on grounds that the African Development Bank gave a no-objection approval of the L&T bid. Thereafter, REA went on to sign the deal, whose works are scheduled for completion in 2022. According to a source at PPDA who preferred anonymity, Turyahikayo’s conduct is insubordinate.

“Why was he hiding to overlook the re-evaluation? Hiding behind ADB’s no-objection is not legally binding because its role in procurements of this nature is advisory and REA has all powers to take final decisions within the procurement guidelines, including cancellation, re-evaluation and or retendering.

“A bank’s no-objection is given based on the client’s recommendations. Mr Turyahikayo, having dealt with donors for over 17 years, knows that donors will always advise based on your submission and recommendations, but the final decision always lies with REA,” she said.

The Observer has learnt that the matter has now been forwarded to President Museveni to intervene.

“We hope the president will institute an investigation otherwise the taxpayer is set to lose billions if the deal goes on without checks,” added the PPDA source.

This controversy also highlights the power struggle that has engulfed REA over the past few years, specifically pitting Turyahikayo and John Turyagyenda, the REA project development and management director.

For instance, Turyahikayo has transferred supervision of this project from the project development and management directorate to that in charge of planning headed by Charles Lutwama, something that has raised red flags within REA. “It is an open war to show who is boss,” intimated a junior REA official who preferred anonymity.

Turyahikayo has been at the helm of REA since its inception in 2003 but in 2017, the board suspended him for six months on grounds of causing financial loss. In that period, Turyagyenda served as the acting executive director.

Somehow, Turyahikayo managed to get his job back but in June 2019 when his contract expired, the board yet again refused to renew it. President Museveni intervened and gave him a one-year extension that ends in June 2020.

The Observer

Comments are closed.