The project, which is 264 kilometers north of the capital Kampala, has been delayed for more than two years because of financial concerns and infighting among top government officials over procurement of an EPC contractor for Karuma, the country’s largest hydropower project.

The delay in the project has heightened fears of a worsening power-shortage crisis in East Africa’s third-largest economy. Demand for power has been growing at an average of 15% annually. With hydropower production below 445 MW, daily demand has outstripped supply, leading to frequent load shedding. 

There were indications in early April that President Yoweri Museveni would prefer a Chinese firm for the Karuma hydropower contract.

Released by President Museveni's office before he left for Durban, South Africa, for a meeting with delegation heads from Brazil, Russia, India, China and South Africa (BRICS), a memo said the president hoped to get commitments for three critical projects, including Karuma.

According to Ugandan media reports, the memo stated, “The President would hold bilateral talks with the President of China, and these would include the prospect of the Chinese government funding the construction of Karuma Dam from funds it had set aside for Africa.”

Under Section 94 of Uganda's Public Procurement and Disposal of Assets Authority Act, CWE faces possible disbarment from government contracting at a time when the battle for the region’s construction market is getting competitive. CWE ranks at No. 59 on ENR's list of Top 60 Chinese contractors, reporting $674 million in revenue for 2010.