Audit faults Huawei, ministry on Ugandan Internet project

Mergers, Acquisitions and Financial Results

An audit of Uganda's US$106 million national fiber backbone and e-government infrastructure project, which was contracted to Huawei Technologies of China, has brought to the fore inadequate supervision by the relevant government ministry and pricing anomalies on the part of the contractor.

The first phase, costing $30 million, was investigated by the government's auditor general, John Muwanga, at the request of the parliamentary committee on Information and Communication Technology (ICT). The resulting 29-page report raises serious questions about the way in which the contractor, Huawei, was selected to implement the project, including the laying of 2,100 kilometers of fiber-optic cable. The auditor general said that Huawei's proposal was not evaluated based on the set standards.

"By not subjecting the proposal to proper evaluation, the ministry exposed itself to the risk of high pricing and unfavorable contract terms," the report reads in part. Huawei apparently quoted the price of cable GYTA53 24 core at $3,200 per kilometer to the ministry and quoted a price of $1,400 per kilometer to another government agency.

The report also raises questions about a $5 million procurement of communication equipment that the auditor general said was not done in accordance with the provisions of the contract. Documentation that was made available to the auditor showed that the communication system was actually bought for $4.5 million, and no adequate explanation was given in respect to the extra cost of $500,000.

The auditor general found there was inadequate supervision of the project by both the Ministry of ICT and the main contractor. Where works were subcontracted by Huawei, supervision by Huawei and the ministry was also lacking.

"This was further aggravated by the fact that most of the work was subcontracted by the main contractor," the report reads in part. It said that a review of contract documents revealed that Huawei had farmed the bulk of the work out to four subcontractors. The auditor general said that under such arrangements, monitoring and supervision of the work becomes complicated and quality is compromised.

According to the report, which has yet to be discussed by the parliamentary committee, guidelines for cable laying were not adhered to in some instances, especially with regard to the cable depth. Also, pre-shipment inspections were not undertaken to guarantee suitability of the equipment and materials required for the implementation.

The auditor pointed out that while parliament asked for work on the second phase to be halted until investigations into the first phase are completed; Huawei has disregarded the directive and gone ahead with work.

Around 800 kilometers of fiber cable has reportedly been laid of the 2,100-kilometer total due in Phase II. Inspections by the auditor general found that "the various sub-contractors were in high gear carrying out excavation and cable burying activities on all the major routes for the phase."

"Quality control of the activities of the second phase may be compromised as there is no supervision being done by the ministry of ICT," says the report.

The auditor general also pointed out the issue of delayed completion of the project, saying implementation was to be done in three phases over a period of 27 months beginning Oct. 11, 2006.

"However 30 months later, the first phase, originally to be implemented in 6 months, has not been fully completed. The project is thus over 32 months behind schedule," the report says. "Delay in the implementation of the project could lead to further administrative costs."

The National Transmission Backbone Infrastructure and E-Government Infrastructure project aims to connect all major towns in the country to an optical-fiber cable network, which would provide faster and cheaper Internet access for government to ensure better service delivery.

The $106 million project is financed using a concession loan from the Export/Import Bank of the People's Republic of China, which will have to be repaid.

The two projects are meant to allow for an e-government policy, reduce expenditure in public administration, provide communication to rural communities and improve service delivery in the fields of health, education and agriculture.

The NBI project entails the laying of 2,500 kilometers of fiber-optic cable countrywide to provide high-speed data transmission, while the EGI connects government ministries, departments and local governments into an e-government network.

The second phase of implementation will link Uganda's borders with those of neighboring countries -- taking in those areas that private players do not consider viable.

According to a project brief, the backbone is to be built and owned by the government, but will be used by both public and private consumers. Once it is completed, a special-purpose vehicle will be created to lease out the lines in the backbone to whom ever is interested.

Computerworld Uganda