Uganda stops digital TV contract

The Ugandan government has stopped the acquisition of a $74m (Ush192 billion) loan from Export and Import Bank of China citing alleged procurement flaws and over-pricing, according to media reports.

The loan was intended to finance the country’s migration from analogue to digital TV.

Cancellation of the loan highlights controversies surrounding the award of digital broadcasting contracts to Chinese firms in the region.

It comes two days after Kenya’s media industry kicked up a storm over the award of the country’s second digital TV signal distribution licence to Pan African Network Group, another Chinese firm.

Kenyan broadcasters Nation Media Group and Royal Media Services are opposed to award of the licence to the Chinese firm after they were knocked out of contention on technical grounds.

Keith Muhakanizi, the deputy secretary at Treasury in Uganda said that though a memorandum of understanding had been signed, the loan process had been stopped.

“We don’t have any other instructions other than stopping it,” Mr Muhakanizi told the New Vision, the government-owned daily.
A decision to restart the process would come from the Prime Minister’s Office where the project falls, he said.

It was not clear whether the stopping of the loan was linked to concerns over the procurement process and alleged cost inflation for the supply and installation of television studio equipment.

Nandala Mafabi, the leader of opposition, faulted the procurement process and the cost of the project. He also questioned the cost for the different aspects of the project.

“The list of equipment in tender is totally different from that on the contract,” said Mr Mafabi. “Also, according to the expert in this industry, the real value in this contract is between $20m and $28m, maximum $30m, even if the best US and EU equipment is to be used.”

He cited a technical process of establishing the main system to handle television programmes for Kampala service area and the countryside, which UBC TV quoted at $5.8m.

“To attain such level of functionality will need a maximum of 10 transmitters at a cost of $1.2m,” said Mr Mafabi.

He also questioned the cost of acquiring an outside broadcasting equipment, which UBC TV quoted at $1m.

Industry experts, however put the cost at $300,000 for a full set of in-built digital televison equipment.

“Huawei signed an agreement worth $74m with UBC, by private negotiation — meaning the tender was awarded without advertisement,” he said.

UBC last year invited bids for installation of 28 digital television stations across uUganda. All countries must migrate from analogue to digital broadcasting by June 2015. Uganda has set a target of December 2012.

Raising funds

Simon Mayende, the director of Information and National Guidance, said that under the Public Procurement and Disposal of Public Assets Authority rules, one is not obliged to commit procuring firms to do the works until they get the money.

“We have it as unfunded priority. It was one of the proposals (loan) put forward for raising funds for this project,” said Mr Mayende.

Jane Kasumba, the UBC publicist, said two broadcasting channels for the Kampala area were being tested at Kololo Hill as part of the migration process even if there is no legislation to guide the entire process now and when the digital becomes operational. “Established procurement procedures are being followed to select a competent company to implement the digital migration project,” said Ms Kasumba. “The Huawei deal is dependent on the source of funding.

If the Chinese grant materialises, it has a conditionality to engage Huawei as the implementer,” she pointed out. “But UBC will engage an independent consultant to check the supplies and oversee the installations by Huawei.”

There are reports that countries that have established similar stations have spent less than Ush1b to adopt digital technology stations from the US, which are superior.

Huawei is the firm that carried out the national fibre optic backbone project, which ran into scandals.