DEVELOPMENT: Uganda Dam Foes Welcome World Bank Pause

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Jun 18 2002 (IPS) - Groups opposing a dam project in Uganda say a World Bank decision to put off deciding on funding for the venture gives affected people time to study it and promote alternatives. The project’s foes here add they remain committed to stopping it outright.

Dozens of international civil society groups have rallied to pressure the Bank to reconsider funding Uganda’s 550-million-dollar Bujagali hydroelectricity project, saying cheaper and less environmentally damaging choices include geothermal power.

Local communities also have voiced ire at what they call a lack of transparency surrounding the project. Last week, they sent a letter to James Wolfensohn, the Bank’s president, urging him to halt further financing until they looked at the project’s Power Purchasing Agreement (PPA), which sets out the relationship between energy buyers and energy.

“By characterizing the PPA as a private contract that should be kept confidential, Ugandan citizens are being made involuntary risk bearers of this project,” the groups said in their letter.

On Monday, the Bank’s independent Inspection Panel called for the release of the documents to ensure ôpublic understanding of the project.”

The Panel also faulted the Bank for failing to do a credible environmental assessment study. The Panel, in a report, added that the Bank neglected to evaluate possible alternatives, chiefly geothermal energy.

On the same day, the Bank’s executive board said it was putting off a decision to give a crucial political risk loan of 225 million dollars until project documents have been released for public debate and ôfurther discussions carried out.”

Civil society groups applauded both the Panel report and the board’s delay decision as rare triumphs, but said the project should be abolished altogether.

ôAny delay gives us more time to get more information out of the bank,” said Lori Pottinger, Africa programme director at the U.S.-based International Rivers Network (IRN). “It also gives us time to analyse the information.

However, she added, “A real victory would be for the bank to say ‘Gosh, this project is ill-conceived we really should have looked at better alternatives and we’ll really give Uganda the best project for its money’.”

The 250-megawatt Bujagali dam, located on the river Nile, is to be built and operated by U.S.-based AES Corporation. It has been the subject of accusations by non-governmental organisations that Bank staff manipulated figures to win project approval from the lender’s executive board and that the project is not economically viable.

Bujagali, at 30 metres high, is said to be the largest private power project in sub-Saharan Africa. The Bank and African Development Bank approved loans and guarantees of 280 million dollars towards the project’s total estimated cost of 550 million dollars.

Several official credit agencies, from which the rest of the project’s funding would have come, declined extending the needed credit and cited insufficient economic feasibility studies. They include the U.S. Overseas Private Investment Corporation and Britain’s Export Credit Guarantee Department.

ôThere’s a whole raft of problems,” said Pottinger. ôThe economic problems with the project are the biggest and most insurmountable. There’s also the loss of a wonderful falls that’s most important to Ugandans and in fact this project could also put them further into debt.”

The Bank has defended the project on the grounds that Uganda is a country where less than three percent of the population has access to electricity.

The Bank says that electricity shortages have significantly hampered investment, private sector development, and economic growth.

ôExpanding electricity supply is a critical requirement for achieving the goals set out in the government’s poverty eradication action plan, goals for which the donor community has provided full support and substantial financing,” said the Bank’s Vice President for Africa, Callisto Madavo.

But the Board and the Panel, this time, agreed with more of the civil groups demands, including requests that the agreement between Uganda and the World Bank be amended to reaffirm the government’s commitment not to develop the Kalagala Falls, downstream of Bujagali, for hydropower.

The directors also urged the bank to closely monitor future electricity demand growth, sector investments, billing and collection, and tariff levels and ôidentify measures to mitigate their impact on the cost to consumers of electricity.”

The board supported the groups’ call for alternatives in power generation by financing geothermal exploration and possible drilling in areas in western Uganda identified as promising by feasibility studies being funded by the African Development Fund.

ôThe Panel process worked,” said Pottinger. ôWe hope that it’s taken to heart at the Bank, which has its ongoing concerns over how the Panel works and it has always been a little bit dicey as to how long the panel would last.”