Billions feared lost as vessel operations stall

The Auditor General (AG) has for the second year running called out the government for failure to enter into formal management and revenue collection agreements with a Chinese investor who has for the last 29 months and counting, managed the operations of the government water cargo vessel. The Chinese firm, Ms Mango Tree Uganda Limited, has been operating MV Pamba since its renaissance after a 16-year hiatus.

Sunday Monitor has since established that Ms Joy Kabatsi, then Minister of State for Transport, signed a Memorandum of Understanding (MoU) with Mango Tree Uganda Limited on May 18, 2020. The MoU allowed the Chinese to rehabilitate and upgrade the vessel under a public private partnership agreement, but it ran into trouble as both Uganda Railways Corporation (URC) and the AG declined to own it.

The MoU was as a result never escalated into formal management and revenue collection agreements. The agreements would have spelt out the terms under which the Chinese firm would manage the vessel. They also would have been specific about how revenue collections would be monitored and split by the parties, while at the same time ensuring the Chinese firm recovered what it expended on refurbishing the vessel.

In his latest report (for the period ending June 2023), AG John Muwanga points out that a lack of formal agreements between URC and the Chinese firm has opened the door to the possibility of the government losing colossal sums of money.

“Although the Marine Vessel (MV) Pamba was operated by Mango Tree (U) Ltd during the year under review, there is a potential loss of revenue from a Concession Agreement for Pamba Ferry since there was no operating lease arrangement between Mango Tree (U) Ltd and URC,” the report reads in part.

Mr Bageya Waiswa, the permanent secretary in the Works ministry, told Sunday Monitor that the agreements are being worked on.

“The Attorney General guided us on how to handle matters around those agreements. We are now at the tail end of formalising our relationship with the service provider,” Mr Waiswa said.

This is the second time in as many years that the AG has raised the red flag around the management of MV Pamba. The first time was in the report for the period ending June 2022. The report pointed out back then that this had set the fertile ground for the possibility of government making financial loss.

“Although the MV Pamba operated during the year, there were no arrangements by URC in respect to monitoring of revenue collected by the operator of the vessel and also the revenue sharing terms, which would allow both parties to mutually benefit as required in the agreement,” AG Muwanga wrote then.

Delays, possible losses

Mr David Musoke Bulega, the acting managing director of URC, said the process of formalising the relationship between URC and the Chinese firm had been delayed because it had to be subjected to scrutiny and due diligence.

“It (the process) had to follow the procurement procedure because this is an investor who put in his money. We had to work out a way how he will be recouping what he put in and at the same time serve the nation fairly. We did not want a situation where the investor would work and take away all the money,” Mr Bulega said, adding: “We had to sit down and see proper terms under which they were going to operate a national asset at a fair return to both the company which invested and to the nation.”

There are conflicting accounts about how long the Chinese have been operating the vessel without a formal agreement. Whereas the AG’s reports suggest that the Chinese have been operating the vessel over the last 29 months, both Mr  Waiswa and Mr Bulega told Sunday Monitor that the vessel has not been in operation for “some time now.”

“Of recent, they (Mango Tree) have not been running it (MV Pamba). They docked it,” Mr Waiswa said.

Sources in the Works ministry, however, told us that the vessel has never been docked, adding that the government lost colossal sums of money because it had not been monitoring the operations of the vessel over the last 29 months.  Our sources could not tell the extent of losses that the government could have suffered. We also could not establish how much the Chinese have been earning from the operations.

Mr Fan Shuchun, the chairman of Mango Tree Group, did not respond to repeated calls. Messages to his WhatsApp account also went unanswered by press time.

Projections

In February 2022, Gen Katumba Wamala, the Works and Transport minister, at the relaunch of the vessel’s operations, said it would ferry at least 21,000 tonnes of cargo per month. In June 2018, when Tanzania registered vessel, MV Umoja, docked at Port Bell in Kampala, Mr Abubaker Ochaki, the head of operations at URC, put the cost of moving cargo on the lake at $65 (about Shs241,595) per tonnes.

If the vessel ferried 21,000 tonnes of cargo over 29 months, it means that it ferried 609,000 tonnes of cargo and raked in at least Shs147.1 billion. Mr David Musoke Bulega, the acting managing director of URC, however, insisted that the duration for which the vessel was operated was much shorter, adding that negotiations will factor that in.

“They operated for some time. That one (duration of operation) is going to be taken into account as we compute the collections,” Mr Bulega said.