ENERGY PS EXIT: Inside Shs2.5Tn Kiba Dam Deal Battle

Stephen Isabalija

The termination of the contract of Permanent Secretary of Ministry of Energy, Dr. Stephen Isabalija without any explanation from government caught many by surprise this week.

ChimpReports has learned that there has been a 9 month battle between the top officials of Ministry Energy and Mineral Development and agencies under the sector over the Shs 2.5tn Kiba Hydro Power Project along the River Nile in Nwoya district.

The government of Uganda signed a Build, Own Operate and Transfer (BOOT) Memorandum of Understanding with the China-Africa Investment and Development Company Ltd (CIADC) for the construction of the 330 megawatts project.


According to the trail of documents and correspondences between the Permanent Secretary, the Executive Director of ERA and CIADC President; Energy officials disagreed and defied orders from each other.

In the MOU, Electricity Regulatory Authority (ERA) was supposed to issue the certificate of clearance for CIADC which is an investment y out feasibility studies for the project.

On September 29th 2016 CIAD consortium owned by Poly Group China (55% shares) and China Development Bank (45%), to carrC forwarded its application to ERA for the permit to undertake feasibility studies.

On December 16th 2016 Acting ERA ED, Edward Iruura wrote to Isabalija as the PS for the guidance before the contractor is permitted.

“In order to enable the Authority conclude the process of evaluating the permit application, this comes to seek your guidance regarding the validity of the MOU considering that more than 18 months have elapsed since it was signed,” part of the letter said.

One month later, obviously after getting no response from Ishabalija, ED ERA Eng. Ziria Tibalwa Waako on 27th January 2017 wrote to the Minister, Irene Muloni for further guidance.

Six months later, on 30th May 2017 Eng. Ziria Tibalwa wrote to the Project Coordinator of CIADC based in Beijing to first provide a “No Objection” letter from the government of Uganda to develop Kiba Hydro Power. ERA wanted the “no objection” letter before permitting CIADC to do the feasibility study.

On 5th June 2017 CIADC President, Lionel Zhao in a bitter letter to Muloni narrated how his company and ERA have been struggling to make sure the permission to undertake the feasibility study is given. Mr. Zhao concluded that any further delay would force his company to withdraw from the multi-trillion project.

“To date, no permit has been currently issued and should the period of availability in which to conduct the site feasibility study be further delayed our company will be forced to consider alternative investments,” he said.

Two days later, on 7th June 2017 Energy State Minister, Eng. Simon D’Ujanga holding Moloni’s portfolio, wrote a letter to Zhao issuing the No Objection letter for the project.

Turn of Events

On July 3rd 2017 Isabalija in total disregard of the Minister’s No Objection letter, terminated the MOU between the government and CIADC in a letter written to Zhao. The minister supervises the PS.

“The purpose of this letter is to inform you that in line Section 6.2, the MOU between this ministry and CIADC regarding your development of Kiba hydropower project is hereby terminated,” Isabalija’s letter said.

On July 7th, four days later, the Solicitor General Francis Atoke wrote to Isabalija warning that the termination of CIADC’s contract was a risk to the government.

“The matter was brought to the attention of the Attorney General and after reviewing the consequences the termination would cause in terms of compensation for the expenses incurred by CIADC on the project under the MOU, he directed me to write to you and inform you that a date for a meeting be agreed on next week, to avert the damages government would be exposed to,” Atoke’s letter said.

Interestingly, on 24th July 2017 ERA in disregard of Isabalija’s termination of the MOU, granted CIADC permit to conduct the feasibility studies for the project.

“Under the powers granted to it by the Electricity Act, 1999 Chapter 145 Laws of Uganda (‘the Act’), the Electricity Regulatory Authority (‘the Authority’) grants this permit to China-Africa Investment and Development Company Limited to conduct the necessary Feasibility Studies and activities in connection with the development of the proposed 330 MW Kiba Hydro Power Project on River Nile in Nwoya and Kiryandongo districts,” the permit said.

According to sources in security, a “party” at the Ministry of Energy wanted USD$ 2million from CIADC before the necessary requirements were approved for the company.

President Museveni was saddened when he learned that CIADC was planning to withdraw from the project and that some significant partners extending support for energy development were  contemplating quitting.

On Wednesday this week, Isablija was stopped from joining the president’s delegation to Equatorial Guinea for a four days oil and security trip on the invitation of the West African nation leader, Obiang Nguema. It was later learned on Thursday that Isabalija has been sacked.

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