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Uganda: Stop World Bank Funding for Bujagali Dam
July 2003


The World Bank should know better. Its own reports show that after 50 years its top-down development schemes - aimed at alleviating poverty - have left the people of Africa poorer. In Uganda, a lush land that lies between the tropical forests of the Democratic Republic of Congo and the dry plains of Kenya and Tanzania, the average annual income is barely $300, and 95 percent of the population lacks electricity. 

So the World Bank and the Ugandan government come up with the outdated solution of building a big dam. They claim the project will double electrical output, stimulate industrial development and bring electricity to Uganda's poor. Never mind that the Bank's own study shows that only 7 percent of Uganda's population would be able to afford electricity from the high-cost ($530 million) Bujagali project. 

In addition, the dam would destroy Uganda's “national treasure,” the beautiful Bujagali Falls at the source of the Nile. Whitewater rafting on the spectacular series of cascading rapids just 8 km from Lake Victoria generates $60 million a year in tourist revenues, with great potential for growth if the falls remain wild.

There are so many environmental and economic problems with the Bujagali Dam that the US Overseas Private Investment Corporation and development banks in Germany, France, Sweden and England have all dropped out. Corporate sponsor AES Corp abandoned the project in August, citing financial woes (AES had been the target of a Global Response/International Rivers Network email campaign). But the World Bank Group, which approved $215 million for Bujagali in loans and guarantees, is still looking for a new corporate partner to build the dam. 

In Uganda, a coalition of organizations called the Save Bujagali Crusade and the National Association of Professional Environmentalists are urging government and Bank officials to put the Bujagali Professional Environmentalists to put the Bujagali project on hold in order to study alternatives. To bring the benefits of electricity to the rural poor, the coalition favors development of Uganda's geothermal, solar and micro-hydro resources, as well as better management of the national grid which currently leaks over a quarter of energy produced. An alternate hydro-electric project site at Karuma is also preferred because its location would favor the underdeveloped northern region, and environmental and social impacts would be minimized.

Uganda is blessed with geothermal potential estimated at 450 megawatts - twice as much power as the Bujagali dam is expected to generate. Whereas power from the dam would surge into the grid all at once (providing more electricity than Uganda would be able to utilize), geothermal power can be brought online incrementally, as demand increases. Clean, renewable and economical, geothermal can provide power in rural areas where it is too costly to extend the national grid. Neighboring Kenya already produces 67 MW from geothermal resources and expects to produce 576 MW by 2019.

A 1996 study by the World Bank and the United Nations Development Program also found “favorable conditions” for solar development in Uganda. Again, Kenya provides a model: more rural Kenyan households get power from solar than from the grid. 

The World Bank's stubborn promotion of the Bujagali dam prevents serious consideration of efficiency and renewable energy alternatives that could fuel rural development and help the poor.

On July 28th, 2005 Global Response reported via World Rivers Review that the Ugandan government announced in April that it has selected the Aga Khan’s Industrial Promotion Services (IPS) to build Bujagali Dam, a large hydro project proposed for the Nile near Lake Victoria. The energy ministry said construction work could begin next year, and is expected to take three to four years.

The Aga Khan IPS is part of a larger foundation, based in Switzerland, which focuses on development projects in poorer nations. It was one of the three firms short-listed by the government last year to bid on the project after the original developer, the US-based AES Corp., pulled out in 2003. The controversial project had been shelved since 2002, when a corruption investigation of a project partner was launched. 

The energy ministry now says that construction of Bujagali will cost about US0 million, down from the approximately 0 million contract arranged between the World Bank and AES. The project’s costs as proposed by AES were found to be excessive in an analysis by independent energy economists. In addition, under the terms of the original contract, Ugandan taxpayers could have been saddled with paying high fees to the company even when drought significantly reduced the dam’s output.

Local groups working on Bujagali have questions about the new reduced cost, resettlement, impacts on cultural resources and many other issues. They have been pressing the government for more transparency and “equal opportunity” civil-society participation in the planning process. A public statement signed by 83 participants at an NGO-sponsored public meeting on the dam project says, “The government should ensure that pertinent information on the project is availed to [civil society groups]; this will enable them to participate from the point of knowledge “Civil society is ready to work in partnership with government to ensure that such participatory consultative meetings are successful.”

The civil society groups also called for the development of alternative energy sources before Bujagali. “The government should seriously and immediately consider developing hydroelectric power from other cost effective sites such as Ayago and Karuma, and should explore and invest in alternative energy sources such as geothermal, solar, biogas, as well as smaller dams,” their statement urges. Because so few Ugandans can actually afford grid-based electricity, they add, “Government should also take deliberate steps to develop the country’s abundant but dwindling fuel wood energy resources for the majority poor.”

The 30-meter-high Bujagali Dam would have serious environmental impacts. The cumulative impacts of Bujagali along with two existing upstream dams is expected to be significant, but the government and project backers have thus far refused to do a cumulative-impacts analysis before undertaking the project. (The World Bank, when it was involved, said such an analysis would be undertaken later, as part of the regional planning efforts for the Nile known as the Nile Basin Initiative.) Bujagali’s reservoir will also inundate high-productivity agricultural lands, and the culturally important Bujagali Falls (which is also a big tourist draw for whitewater rafting businesses). 

Endemic fish species could be threatened, as well as nesting areas for bats and birds. The project’s 70 km of transmission lines will cut through protected forest reserves and farmland. The proposed Karuma hydro project would, according to the 2001 environmental assessment for Bujagali, have fewer social and environmental impacts than Bujagali, and fewer cumulative impacts on the Nile River. 

The Karuma project is being promoted by a Norwegian team, but has been sidelined as the government aggressively pursues Bujagali. An official “options assessment” for Bujagali even went so far as to give Karuma a significantly higher price than the developers’ own cost estimates, presumably to make Bujagali look more cost-competitive. This “Bujagali bias” has pervaded the process for choosing the next
energy project for Uganda.

Civil society groups have also raised a technical concern about the river’s ability to support so many dams. The concern follows the failure of the upstream Owen Falls dam complex to produce as much electricity as it was designed to do. The Ugandan media have reported that the two hydro projects are underperforming by 50-80 megawatts; the energy minister has blamed the shortfall on drought, while a local hydrologist says the project design was based on excessively optimistic hydrological data, and that the dams could even be contributing to a permanent lowering of Lake Victoria’s levels.

“Government, World Bank and Acres International must give a proper account of the failure of the Owen Falls Extension dam to deliver the promised electricity, and publicly accept total responsibility and provide compensation for the failure and the consequent decline in the water levels of Lake Victoria following the commissioning of that dam,” says the NGO statement.

The World Bank’s private investment arm, the IFC, was to be the major lender for the project, but pulled out after AES withdrew. The Bank has not indicated whether or not it will get involved this time. Since the World Bank backed off from the project, the Ugandan government has proposed various funding mechanisms, from an infrastructure development bond to raiding the national social-security fund to pay for the dam.

This is an archived campaign.