A fraud scandal of up to Ugx 500 billion has rocked the Ministry of Energy and Mineral Development. The funds previously part of the revenues gotten from development agencies through the Rural Electrification Agency were meant to scale up electricity access in the rural prescripts of the country.
The scandal has left staff at the Ministry of Energy calling for an intensified forensic audit by the Auditor General and a thorough investigation by a special committee instituted by Parliament of Uganda.
The money is part of the Ministry of Energy and Mineral Development 17 loans, totaling more than Shs10 trillion to construct hydroelectricity dams, distribution lines and enable rural electrification.
However, despite the huge investment, Uganda has 27 percent access to grid connection, with large swaths of the country plunged into darkness. However, sources at the Ministry of energy have divulged a plan where the remaining Ugx 500 billion was swindled just after phasing out of the Rural Electrification Agency in 2021.
Between 2002 to 2006 the World Bank financed the Ugandan Government under the Energy for Rural Transformation Phase one with more than USD 123.31 million (About Ugx 444 billion). An additional USD 120 million (Ugx 432 billion) was also awarded to the project between 2006 to 2009 and another USD 196 million (About Ugx 705.6 billion) later to complete the Energy for Rural Transformation.
“Advances to ministries come from the Ministry of Energy and Mineral Development through the Rural Electrification Agency special account in amounts sufficient for each of the implementing agencies participating in the project to meet eligible expenditure of a period not less than 90 days. Uganda Communications Commission, Private Sector Foundation, and Bank of Uganda have their special accounts separate,” wrote part of the project document.
The Energy for Rural Transformation – ERT phase one targeted to move rural Electrification access of 1% in 2001 to 10% in 2010. It was funded from a number of sources including the World Bank (IDA, IFC, GEF and PCF), SIDA and NORAD and a levy on bulk purchases by the Electricity Transmission Company Ltd.
On top of the loans, Government of Uganda remitted up to Ugx 110 billion in the first phase of the project and another Ugx 120 billion for the second phase of the project.
Upon the dissolution of the Rural Electrification Agency, Parliament recommended that the senior staff at the Agency be incorporated into the Ministry of Energy, pending the implementation of further electricity projects the government had embarked on.
At the time, Ugx. 500 billion of the more than Ugx 1.5 trillion in the Rural Electricity Project had been saved by REA prompting an order from government that the remaining money be sent to the Ministry of Energy and Mineral Development Accounts for further use.
However, the money has since disappeared from the institution’s accounts without accountability.
“When the World Bank approved a new USD 638 million loan for the Electricity Scale up Project last year, all staff at REA who had been incorporated into the Ministry of Energy were sacked, disregarding the Parliamentary resolution and directive,” a source that asked not to be named told this website.
Upon their sacking, about 22 engineers and managers have been recruited to start working on the new project with a net salary of the four top managers raised of Ugx 49 million each while the other managers receiving not less than Ugx 24 million each. The lowest earner in the project is expected to get Ugx 8 million.
Sources also indicate that the Ministry is grappling with building the capacity of the new engineers so as to get knowledge about the project despite sacking the already experienced ones.
Also, the sacked engineers were in charge of designing the project. The same engineers designed the operating guidelines. However, because of their closeness to Electricity for Rural Transformation projects. Their sacking according to sources within the ministry is meant to clear any evidence on who to whistle blow on the embezzled funds.
“This is weigh above the amount of money the managers at the Rural Electrification Agency were earning. Yet one of the reasons for the dissolution of REA was to cut costs while keeping the already available staff at lower wages and salaries,” another source at the Ministry of Energy told this website.
A highly placed source within the Ministry told this website that the former REA staff were sacked only because, the Ministry and several officials feared that they would divulge information of the stolen Ugx 500 billion and the replication of the electricity scale up Project which had been done earlier with more that USD 446 million.
“They cannot allow us to remain. They know the implications of taking up to 500 billion shillings in fraud,” one of the sacked engineers told this website.
Also, almost all members of Parliament on the Committee of National Economy have been lured into taking parts of the grid and part of efforts to clear the expansion project in Parliament.
While presenting the status update of the loans to the committee on national economy in Parliament, Ms. Irene Pauline Batebe, the Permanent Secretary of Ministry of Energy and Mineral Development, said many of the projects are at various stages of implementation.
She said while some have already been completed, others are ongoing and that the absorption rate of the loans secured was quite impressive.
Ms. Batebe said the loan, which was approved by Parliament last year to connect a million customers to the grid, is already at an advanced stage, adding that work will soon start.
“The electricity access scale up project, whose financing is to the tune of $638 million, was approved by Parliament. The ministry is now finalizing the loan effectiveness conditions with the set timelines. This project is expected to add over one million connections to the national grid targeting households, commercial enterprises, public institutions, mining centers and industrial parks, thereby creating demand for up to 500MW. Implementation of the project is expected to commence after April 2023,” she said.
Under the project, more energy saving stoves will be offered to the people. Also, solar panels will be offered on Credit to the different Ugandans across the country under the Uganda Energy Credit Capitalization Company. More than USD 130 million has been earmarked for the project.
However, several of the stakeholders have raised concerns on why Uganda Energy Credit Capitalization Company – UECCC will lend, with interest utilities for the people across the country, especially solar panels yet the World Bank and the subsidiary organizations are giving the resources without interest.
Also, Industrial Parks will be supported with electrification in up to USD 140 million for three phase power supply under the Energy Access Scale up Project. The project will also handle grid expansion with up to USD 357.5 million, a project earlier handled by ERT I, II and III.
Currently, Government of Uganda has also earmarked another Euros 50 million from the French people to handle the same project as such done in the Electricity for Rural Transmission phase 1, 2 and 3 and Electricity Scale up Project.
