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Tembo Steels pays Shs520m to Uganda Railways Corporation for stolen railway tracks worth shs12.4bn

Uganda Railways mounted a search at Tembo Steels two factories in Lugazi and Iganga (in picture) and recovered stolen railway materials worth UGX12.39 billion.

Kampala, (UG):- Uganda’s Premier Steelmaker, Tembo Steels Limited has paid UGX520 million as an out-of-court settlement, to Uganda Railways Corporation (URC) over a matter in which the steel company was sued for being in possession of stolen railway tracks worth UGX12.39 billion. 

In a raid conducted by URC and security agencies at Tembo Steels’ Lugazi and Iganga factories, 1,946 railway materials were discovered.

Using the rates applied by the government’s Chief Civil Engineer the materials discovered at the two factories in Lugazi and Iganga were valued at UGX 12.39 billion. 

“However, URC entered into an out-of-court settlement for only UGX 0.52 billion as per the agreement made on 27th September 2021 resulting in a loss of UGX11.87 billion. It was also observed that the payment received from an out-of-court settlement was also less than the exhibits recovered from the site totalling to 1946 railways equivalent to UGX8.76 billion,” the Auditor General noted in his 2021/22 report on URC.

Tian Tang Steel, another steel company that was found with about 750 meters of vandalised railway line at its premises, also opted for an out-of-court settlement of UGX210 million.

“Although the cost of the stolen railway materials, excluding compensation and reinstatement costs, was estimated at UGX.1.10 billion, URC entered into an out-of-court settlement for only UGX.0.21 billion as per the agreement made on 16th November 2021 resulting in a loss of UGX.0.89 billion, according to the Auditor General.

The two deals, according to the Auditor General, caused the government a combined loss of UGX.12.76Bn.

According to the Auditor General how the two cases were handled, was “an indication of collusion and that the legal cases were mismanaged”.

However, URC blames the steel companies for knowingly providing steady demand for the stolen rail tracks and sleepers, even when they are clearly marked and branded as being URC property.

The railway materials are melted into liquid steel that is then converted to several other steel by-products to feed Uganda’s construction industry.

URC has nearly lost entire sections of the disused Busoga loop and Kasese lines. The thieves are now turning to sections on the functional Kampala-Jinja-Malaba line causing both losses to URC as well as its customers who have to bear longer delivery periods as repairs are undertaken or when accidents happen due to broken lines.  

According to URC,  up to USD100m has been lost in the 10 years to 2021. 

Although following the swoops on the steel companies in early 2o21 theft and vandalism had reduced, according to John Linnon Sengendo, the spokesman for URC, the vice has resurfaced with 2023 recording the highest losses in the 3 years since 2020.

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“About UGX1.7 billion worth in railway material were stolen from the track between 2020 and 2023, with 2023 being the most dangerous⏤ UGX881 million worth of material was stolen last year,” Mr. Sengendo told CEO East Africa Magazine in an online conversation.

“Vandalism was reduced in 2022, but shot up in 2023,” he added.

Asked if the thieves had learnt anything from the court suits and subsequent fines slapped on them, Sengendo answered in the negative.

“They’ve learnt nothing. They still believe they can get away with it,” he said, adding: “On an active track, hundreds of millions in shillings, have been lost, especially in insurance compensation in case of accidents and of course, the clients lose time and money as well”.

The thieves and the steel makers’ furnaces have not spared road signs, guardrails and other steel road furniture on public roads run by the Uganda National Roads Authority (UNRA).

“We have made several arrests in the past and continue to arrest suspects, but the vice isn’t going away,” Allan Ssempebwa Kyobe, the  Manager of Media Relations, Public and Corporate Affairs, told this reporter in a phone chat. 

“The theft/vandalism of road furniture remains a big problem,” he adds, urging the thieves to stop the dangerous habit.

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“Today you may be benefiting from the theft, but tomorrow you or your loved ones could be victims of a road accident because you stole that road sign warning motorists to slow down,” Ssempebwa appeals.

“I also urge the public to be more vigilant,” he said.

Simon Kasyate the Kampala Capital City Authority (KCCA) publicist has also frequently decried the theft and vandalism of city public service infrastructure that includes manhole covers, metallic dustbins, road signs and in some cases, entire streetlight poles.

All fingers point to metal scrap buyers, who feed the steel makers’ furnaces. 

Source: CEO East Africa

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