THE REPUBLIC OF UGANDA OFFICE OF THE AUDITOR GENERAL IMPLEMENTATION OF TRANSMISSION LINE INFRASTRUCTURE PROJECTS UGANDA ELECTRICITY TRANSMISSION COMPANY LIMITED VALUE FOR MONEY AUDIT REPORT MARCH 2015 OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA OFFICE OF THE AUDITOR GENERAL IMPLEMENTATION OF TRANSMISSION LINE INFRASTRUCTURE PROJECTS UGANDA ELECTRICITY TRANSMISSION COMPANY LIMITED – (UETCL) VALUE FOR MONEY AUDIT REPORT MARCH 2015 AUDITOR GENERAL’S MESSAGE AUDITOR GENERAL’S MESSAGE 31st March 2015 The Rt. Hon. Speaker of Parliament Parliament of Uganda Kampala REPORT OF THE AUDITOR GENERAL ON IMPLEMENTATION OF TRANSMISSION LINE INFRASTRUCTURE PROJECTS BY UGANDA ELECTRICITY TRANSMISSION COMPANY LIMITED In accordance with Article 163 (3) of the Constitution, I hereby submit my report on the audit undertaken on Implementation of Transmission Line Infrastructure Projects by Uganda Electricity Transmission Company Limited. My office intends to carry out a follow – up at an appropriate time regarding actions taken in relation to the recommendations in this report. I would like to thank my staff who undertook this audit and the staff of Uganda Electricity Transmission Company Limited for the assistance offered to my staff during the period of the audit. John F. S. Muwanga AUDITOR GENERAL TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................. iii CHAPTER ONE ............................................................................................................... 1 INTRODUCTION ............................................................................................................. 1 1.1. BACKGROUND ......................................................................................................2 1.2. MOTIVATION .......................................................................................................2 1.3. DESCRIPTION OF THE AUDIT AREA ..................................................................3 1.4 AUDIT OBJECTIVES ...........................................................................................7 1.5 SCOPE ................................................................................................................7 CHAPTER TWO .............................................................................................................. 9 2.0 AUDIT METHODOLOGY ......................................................................................9 2.1 SAMPLING .........................................................................................................9 2.2 DATA COLLECTION METHODS ..........................................................................9 CHAPTER THREE ......................................................................................................... 11 3.0 SYSTEM AND PROCESS DESCRIPTION ..........................................................12 3.1 ROLES AND RESPONSIBILITIES OF KEY PLAYERS .......................................12 3.2 PROCESS DESCRIPTION .................................................................................13 CHAPTER FOUR ........................................................................................................... 14 4.0 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ................................15 4.1 PROGRESS OF WORKS ....................................................................................15 4.2 ASSESSMENT OF WORKS EXECUTED ...........................................................21 4.3 SUPERVISION AND MONITORING OF PROJECT WORKS ..............................23 4.4 RESETTLEMENT OF PROJECT AFFECTED PERSONS ...................................25 4.5 WAY LEAVES INFORMATION SYSTEM (WIS) ....................................................27 GLOSSARY OF TERMS ..................................................................................................29 Appendix I: Organization Structure of UETCL. .............................................................30 Appendix II: Documents reviewed ................................................................................31 Appendix III: Interviews conducted ..............................................................................33 Appendix IV: Delay by CGV to approve valuations submitted by UETCL .......................34 VALUE FOR MONEY AUDIT REPORT FOR VALUE IMPLEMENTATION OF TRANSMISSION LINE INFRASTRUCTURE PROJECTS MARCH 2015 BY UGANDA ELECTRICITY TRANSMISSION COMPANY LIMITED – (UETCL) LIST OF TABLES, FIGURES AND PICTURES Table 1: Project Objectives ................................................................................................4 Table 2: Funding of UETCL projects under implementation ...........................................6 Table 3: Planned execution period and progress /status of implementation ......... 15-16 Table 4: Proportions of PAPs so far paid and %age acquired ................................. 17-18 Table 5: Execution of RAP implementation ....................................................................18 Table 6: Donor and GoU disbursements ........................................................................19 Table 7: RAP funds release by MEMD to UETCL ...........................................................20 Table 8: Comparison of tower spans against provided tower schedules .....................22 Table 9: Comparison of quantities executed against works certified ..................... 22-23 Table 10 Progress of contract signed between M/s Lamba and UETCL for construction of resettlement houses under RAP ...........................................26 LIST OF FIGURES Figure 1: Project initiation, implementation and maintenance process ........................13 Picture 1: Demolitions at Mbarara North substation .......................................................24 VALUE FOR MONEY AUDIT REPORT FOR VALUE IMPLEMENTATION OF TRANSMISSION LINE INFRASTRUCTURE PROJECTS BY UGANDA ELECTRICITY TRANSMISSION MARCH 2015 i COMPANY LIMITED – (UETCL) LIST OF ACRONYMS AND ABBREVIATIONS AFD French Development Agency AfDF Africa Development Fund AP Angle Point CGV Chief Government Valuer EPC Engineering Procurement and Construction GoU Government of Uganda JBIC Japanese Bank for International Cooperation NELSAP Nile Equatorial Lakes Subsidiary Action Plan NEMA National Environment Management Authority NFA National Forest Authority PAPs Project Affected Persons PID Project Implementation Department RAP Resettlement Action Plan ROW Right of Way UETCL Uganda Electricity Transmission Company Limited VALUE FOR MONEY AUDIT REPORT FOR VALUE IMPLEMENTATION OF TRANSMISSION LINE INFRASTRUCTURE PROJECTS ii MARCH 2015 BY UGANDA ELECTRICITY TRANSMISSION COMPANY LIMITED – (UETCL) EXECUTIVE SUMMARY Transmission lines provide infrastructure that is used to evacuate high voltage power from generation plants to the national grid for eventual use by consumers. The Government of Uganda established Uganda Electricity Transmission Company Limited (UETCL) to manage the high voltage transmission grid infrastructure to cope with growth in energy demand. The Office of the Auditor General undertook a value for money audit to assess the progress of implementation of three power transmission lines construction projects: Nile Equatorial Lakes Subsidiary Action Plan (NELSAP), Mbarara-Nkenda/Tororo-Lira and Mputa/Hoima-Fort-Portal-Nkenda projects, implemented by UETCL. KEY FINDINGS Progress of works The implementation of all the three projects was behind schedule, with the Mputa/Hoima – Nkenda line, scheduled to start in 2008, not yet commenced almost seven (7) years later. All Engineering, Procurement and Construction (EPC) contractors had already submitted requests for extensions of contract periods, ranging between eight (8) and eleven (11) months, which will lead to resource overruns. The delays were caused by delays in acquisition of land (Right of Way), the long lapse of time between conducting of the feasibility studies and actual compensation of project affected persons, diversion of RAP funds and expiry of consultancy contracts. As a result of the delays, Kabalega mini hydro power plant was operating at idle capacity (generating less power than installed capacity) which cost UETCL USD 3m as compensation for unevacuated power (deemed energy) over the period from December 2012 to July 2014. The delays will also lead to cost overruns due to contract time extensions, low absorption of funds and an idle substation (Fort Portal) upon completion under the Mbarara –Nkenda/ Tororo/Lira transmission line projects. Assessment of works executed It was established from a technical assessment of the civil, electrical and mechanical works so far undertaken by March 2015 that the works were generally done in accordance with the agreed designs and specifications for the five (5) contracts. Supervision and monitoring UETCL entered into two contracts to the tune of Euros 3,959,238 with consultants for the project management and supervision of the construction of two transmission line projects of NELSAP & Mbarara/Nkenda & Tororo-Lira. From a review of the consultants’ contracts and field inspections, it was observed that: The design of the contract created a possibility of the consultant being paid up to 60% of the consultancy contract amount even where there was either no or minimal progress of the construction works. For example by the time of audit, the consultant for NELSAP had VALUE FOR MONEY AUDIT REPORT FOR VALUE IMPLEMENTATION OF TRANSMISSION LINE INFRASTRUCTURE