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REVEALED: Why Kuwait firm contract on two key road projects was terminated by UNRA

Details why Kuwait firm contract on two key road projects was terminated by UNRA

AECO through their lawyers of OSH Advocates and Kampala Associated Advocates has petitioned the arbitration panel seeking compensation of $5 million over what they claimed as unfair termination of their contract for the supervision of Tirinyi-Pallisa-Kumi/Pallisa-Kamonkoli road in eastern Uganda and Masindi Kisanja-Tangi-Paraa-Buliisa road, one of the oil roads in the country’s mineral-rich Graben region (PHOTO/Courtesy)

KAMPALA – The Uganda National Roads Authority (UNRA) has insisted that the termination of services of Abuljebain Engineering Consulting Office (AECO), a Kuwait-based firm contracted to supervise two major road projects in the country was due to “a lot of breaches.”

AECO through their lawyers of OSH Advocates and Kampala Associated Advocates has petitioned the arbitration panel seeking compensation of  $5 million over what they claimed as unfair termination of their contract for the supervision of Tirinyi-Pallisa-Kumi/Pallisa-Kamonkoli road in eastern Uganda and Masindi Kisanja-Tangi-Paraa-Buliisa road, one of the oil roads in the country’s mineral-rich Graben region.

This was after AECO also appealed to President Museveni to intervene. Mr. Museveni later directed UNRA Executive Director Allen Kagina to sort the matter.

But in an internal briefing, UNRA says AECO’s petition is a futility because the company breached all contractual obligations such as putting in place a resident engineer, a measurement engineer, an environmentalist and sociologist “whose absence on site greatly affected the effective management of the contract.”

“This surely is testimony of its (consultant) inability to perform the contract and having failed to perform the contract, it now seeks to use influence to have its breaches reconsidered,” UNRA says in their brief, a copy seen by this website.

AECO won the contracts to supervise engineering designs and building works for both road projects on the 21st of September, 2018. China Communications Construction Company Limited (CCCC) was the main contractor for the road, which is nearing completion.

The said consultancy services’ contract was to run for a period of Sixty (60) months from the time of contract signature (21st September, 2018).

UNRA says whereas the contract indicated that the consultant was required to commence the services within 4 weeks from the date of Contract Signing, he did not report to site until 19 November 2018.

These delays by AECO to commence the services affected the project, according to UNRA.

The roads authority adds that under item 5 of the Statement of Requirements, the consultant failed to meet its Contractual obligations to prepare and submit Monthly Progress Reports to the Authority/Employer on time.

This website has seen letters dated 30th July, 2019, 30th September, 2019 and 16th July, 2020 to AECO raising the issues.

“Upon the continuous failure to meet this contractual obligation, the Consultant was notified to rectify the said breach but still never complied. Failure to submit Contractual reports constrained the Employer and the project in many aspects of Project Planning and Monitoring,” UNRA says.

UNRA says despite approving the Environmentalist, Road Safety Specialist and the Sociologist for the project, none of these key staff reported to site till the month of notice to terminate (August 2020) “despite its full knowledge that the project traversed through a very eco-sensitive area that required the expertise of the Environmentalist.”

“This caused a lot of non-compliances in Environmental and social safeguards on the project,” UNRA states.

Whereas UNRA signed the Contract in association with M/s Technology Ltd, AECO instead brought in another company, Prome, without the employer’s approval, which was a breach of provisions of Sub-Clause 10.1 of the General Conditions of Contract.

“Clause 10.1 provided that the Consultant shall request approval in writing from the Procuring and Disposing Entity for all subcontracts awarded under the contract that are not included in the contract. Therefore failure to seek approval from the Employer at the point of subcontracting Prome amounted to breach of the aforementioned clause.

The Authority later learned that on several occasions Prome notified AECO of non-payment and its intention to demobilise the staff on site which put a very big risk to the Employer,” UNRA says.

From the onset, UNRA says AECO failed to mobilize the Team Leader/Engineer’s Representative.

“The Team Leader/Resident Engineer was off site for approximately 5 months. Without the team Leader, the works Contract could not effectively be administered in accordance with Sub-Clause 3.1 of the General Conditions of Contract. Without the Team leader on site, all correspondences and /or contractual communications with UNRA and or Contractor had to be issued by AECO Head Office in Kuwait. This communication gap resulted into a lot of unnecessary delays that made the Contractor to evoke contractual clauses that could have been avoided,” UNRA states.

“Worse still, this protocol and communication gap persisted long after the deployment of the Team Leader hence contributing further to the underperformance of AECO under this Contract,” it adds.

After the contractual breaches, UNRA has contracted M/s Prome Consultants Ltd to continue with the supervision services for the road works until completion.

Constructed by Arab contractors, Tirinyi-Pallisa-Kumi (67km) and Pallisa-Kamonkoli (44km) is considered the smoothest road in Uganda, with an international roughness index averaging 1.3 m/km. Thats is typical of a runway. Meaning you can have a cup of coffee in the car and it won’t pour if the driver is equally a smooth rider.

The UNRA argues that this is the excellence that its in-house supervision team has delivered by collaborating well with the contractor – Arab Contractors and won’t allow AECO to tarnish the achievement.

According to UNRA, AECO too reported late for assignment on the Tirinyi-Pallisa-Kumi project, after signing the Consultancy Services Contract signed on 15th March 2021. The Consultant commenced the services 26th April 2021 replacing the UNRA in-house supervision team that had supervised the works since 15th March 2018.

“By the time the Consultant took over from UNRA In-House Supervision Team, the physical progress of works was estimated at 93% and 97% for Lot1 and Lot2 respectively,” says the briefing.

“However, since the Consultant took over the services, the project is experiencing several challenges which have affected the progress and may unnecessarily delay completion of the projects”.

The consultant is also accused of refusal to accept UNRA’s taking over of completed section while the outstanding works are executed during the Defects Liability Period.

“The consultant prefers to grant further time extensions and yet this has high risks to UNRA regarding the cost implications to be incurred. It would cost the Employer more than UGX. 1,000,000,000 on each. Lot monthly when the time for completion is extended due to the encumbered section and yet we aren’t certain how long it will take to resolve the remaining encumbrances,” the briefing says.

UNRA also opines that it is very evident that the Resident Engineer has got very limited power and authority on site as he is always waiting for the site related decisions to be processed from their Head Office in Kuwait.

“We expected the RE to have adequate delegated authority on site in order to facilitate the progress of the works,” says the briefing.

 

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