URC Explains why Buying Old, Expensive Locomotives was Better than New, Cheaper Ones

Was there value for money in the used locomotives purchased by Uganda Railways Corporation-URC from South Africa? Why didn’t the parastatal go for new and cheaper ones from China?  Did the management flout any procedure?

These are some of the questions arising from the decision by President Yoweri Museveni to direct the sacking of the entire URC Board and the  MD, Stanley Sendegeya.

The president’s action was in response to the findings of the probe into the corporation’s affairs, particularly the sale of assets like land, and the purchase of equipment.

The agency acquired four used locomotives and spent 48 billion shillings, much more than what a technical committee had recommended for the same number of new engines. URC had the opportunity to purchase four brand-new locomotives at 36 billion shillings from a Chinese company but opted for eight-year-old ones from South Africa. 

According to management, the China-made locomotives have 2000 horsepower engines, while those from South Africa’s Grindrod Locomotives run on 3,000 horsepower engines made by US-based General Electric (GE).

This, according to them would reduce the cost per unit of moving cargo since one engine would carry more cargo volumes. “If you have 2000 HP engines, you will need two locomotives to actually move the cargo that only one of these will move,” said John Lennon Sengendo, the head of corporate affairs at URC, adding that the Chinese machines even consume more fuel. The type that they had proposed to buy from China, is the same as the Kenya Standard Gauge Railway operates. 

According to URC, it takes 3,000 litres of diesel for the new engines to move from Kampala to Malaba and back, while the Chinese ones would cost almost twice as much.  

“Even if the Chinese engines were brand-new, they are fuel guzzlers! Why use that to move the same cargo that we can move at a cheaper cost? It doesn’t make business sense,” Sengendo reasoned.

The decision was also informed by the fact that the supplier offered to supply spare parts for two years after the purchase is concluded, incentives that were not offered by the Chinese suppliers.

The management also says they were convinced that the South African-supplied equipment has a simple supply chain for spare parts which can be found in different parts of the world, while for the Chinese ones, parts can only be for from China.   This limited supply chain would make it expensive to maintain the machines. 

However, even when they decided to change, they had to seek the consent of the Solicitor General who endorsed the changes. URC also says that the four locomotives alone were worth 42 billion shillings, while 6 billion shillings was spent on two reach stackers, the vehicles used to move, and load offload cargo to or from a train wagon. 

The rest of the money was used to train staff operating the locomotives. “We explained all these things to the committee, but nothing of the sort came out in the committee report,” said Sengendo, who however expresses hope that the president would look at their argument.

Asked whether they feel they did not flout the laws of public procurement, he said the major decisions including the switch from new locomotives to used ones, were done with the consent of the Solicitor General. 

“If he had noticed any fault in the process, he would have advised otherwise, but he didn’t,” said Sengendo. He adds that no one at the URC handled any money before or during the transaction because the Ministry of Works and Transport and of finance dealt directly with the suppliers through the bank. 

The URC initiated the process indicating that they needed the equipment and after approvals, they gave Letters of Credit to Stanbic Bank, which in turn paid the supplier.   “Because for us, we expressed our needs to them, but the process was done from the other side. Any process in government must get the support of the Solicitor General. Otherwise, it won’t go through,” Sengendo said.  

The parliamentary report also alleged that the locomotives were lying idle in the yards because they are not compatible with the kind of rails in Uganda and that the Triangle which is used for the trains to turn at the station was also faulty.

Sengendo dismissed this, saying the Triangle became unusable because a big part of it was taken by the Uganda National Roads Authority due to the construction of the flyovers. He said, however, that the locomotives instead make a U-turn which does not need to use the triangle. 

During the COSASE probe, URC Chief Finance Officer, David Musoke said that there was a ‘small problem’, but not that the locomotives could not work. 

“The locomotives are okay, except for what we call the triangle, that is where the train turns from and these lines are old, so we cannot risk these ‘new’ machines turning on them, so they are working on them, and we cannot drive a locomotive in a reverse way.”

Two of the locomotives have been deployed on the Malaba-Tororo- Jinja area, while one plies the Kampala-Malaba route, while the fourth is operating the Kampala -Namanve passenger service, according to records at URC.

Sengendo also clarified that the corporation spent 285 million shillings in legal fees and not 1.8 billion as stated in the reports.

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