Developer facing legal battle over arrangement fees in Uganda
Sempaya geothermal hot springs, Uganda (source: flickr/ Joostv, creative commons)
Alexander Richter
7 Aug 2013
U.S. infrastructure firm AAE Systems is facing legal actions by a former local representative in Uganda over payment of arrangement fees for a large scale geothermal project planned in Western Uganda.
Infrastructure firm AAE, which is planning the development of a $1.2 billion geothermal project in Western Uganda is now facing a legal battle about arrangement fees of up to $60 million.
In 2010, the country contracted Apex Petroleum Uganda as a representative through the director of the company Ahmed Mutimba. Under the contract Apex was to identify and introduce projects that could then be acquired and developed by AAE Systems in Uganda.
The legal action now sought by Apex seeks to enforce contract performance against AAE systems Inc.
In the petition to the minister, the law firm claims that their client (Apex Petroleum Uganda Ltd.,) in 2010 was contracted by AAE Systems Incorporated to act as its representative through the company’s director Mutimba. The scope of the contract involved identifying and introducing projects that would be executed by AAE locally.
The letter points out that Apex Petroleum executed its functions outstandingly, introducing AAE in 2012 to Katwe Geothermal Power project Ltd., (KGPPL) and that it was agreed between “our client and AAE that for that for this introduction, it would be paid five percent of the project cost as remuneration.”
According to documentation, payment was to be effected upon AAE securing a Power Purchase Agreement (PPA) from the Government of Uganda.
According to the letter, their client worked vigorously to ensure that a PPA was executed between Uganda Electricity Transmission Company Limited (UETCL) and AAE by lobbying the legislature, Executive and several technocrats in the energy ministry to have the PPA signed.
However, AAE is alleged to have turned its back on Apex Petroleum, disowning it on the verge of the execution of the PPA and on Wednesday ran an advert in media to the effect that Ahmed Mutimba saying he does not work for nor represent AAE systems incorporated.
“Our client was surprised to learn that just before the execution of the PPA, its services were terminated and AAE is reluctant to pay the agreed 5% (USD$ 60,000,000) of the project cost estimated at approximately (USD 1,200,000,000) without any explanation,” the letter which was copied to the speaker of parliament and Katwe Geothermal Power Project Ltd., reads in part.”
Source: AllAfrica.com
