On September 16, local media reports in Uganda indicated that state-owned China International Water & Electricity Generation Company Limited (CWE) is stalling the completion of a bridge project associated with the 183 MW Isimba dam project in Uganda over a $42 million payment dispute with the Uganda Electricity Generation Company Limited (UEGCL). CWE alleges that UEGCL is unfairly withholding payment of $28 million due to the Chinese contractor. Conversely, UEGCL asserts that the payment is being withheld due to nearly 700 defects found in completing the dam that CWE has thus far failed to repair.
According to CWE, 95% of the bridge project is complete, but they cannot complete it without financing from the Ugandan government. CWE initially signed a contract to construct the $583-million dam (primarily funded by the Export-Import Bank of China) in September 2013. The project was commissioned in January 2019, with associated infrastructure works proceeding after that. The allegations of poor quality control on the part of the Chinese company are not new. In 2016, a legal claim was filed against the Isimba project in response to a leaked report that alleged that the Chinese contractor was using substandard materials for construction of the dam.
The Isimba project is considered to be the fourth largest hydropower project in Uganda and is expected to increase the country’s power production capacity by 23 percent. At present, Uganda is facing severe power shortages that limit the country’s economic development potential.