Unsettling business: social consequences of the Bujagali hydropower project

Unsettling business: social consequences of the Bujagali hydropower project

The Bujagali hydropower dam on The River Nile in Uganda was fi nally commissioned in August 2012 after eighteen years of controversy that delayed the dam construction.  The dam faced numerous economic, environmental, social and spiritual challenges that stalled the dam construction while the project underwent investigations over bribery claims and project reviews on the dam design and capacity. The dam cost kept on growing from $580 million at inception to $860 million and finally $902 million ($3.6million per MW) at completion.  Independent investigations by the Ugandan Parliamentary adhoc committee on energy put the dam’s actual cost at $1.3 billion ($5.2million per MW or more).

The dam project was marketed by The Government of Uganda and the World Bank as the least-cost project. Two different hydropower companies - AES Nile Power and Bujagali Energy Limited – feature in the development of the Bujagali hydropower dam in Uganda. The project was undertaken as a Public Private Partnership between the Government of Uganda and International Financial Corporation (IFCs), the World Bank Group, European Investment Bank, African Development Bank in collaboration with dam construction companies- Industrial Promotions Services (IPS), a holding company of the Aga Khan and Sithe Global Power. The project partners, IPS, Sithe Global Power and the government set up a new company- Bujagali Energy Ltd (BEL) to operate and run the project.

The Bujagali hydropower dam development was marred with controversies that saw the dam take over 18 years to complete. The dam project was investigated four times, twice by the Inspection Panel of The World Bank, by The African Development Bank’s Independent Review Mechanism (IRM),  and by The European Investment Bank’s Compliance Review. A long range of cases have also been opened by the IFCs Compliance Advisor Ombudsman. Citizens groups in Uganda like the National Association of Professional Environmentalists (NAPE), Save Bujagali Crusade, and other international groups like International Rivers Network (IR), and Counter Balance played an important role in raising the potential social, economic and environmental impacts of the project in the public domain and prompted the lenders to investigate and consider policy adherence.

The project financiers – the World Bank (WB), African Development Bank (AfDB), and the European Development Bank (EDB) – investigated the project and found the project to have violated several of their bank policies. The banks wrote reports on their findings and made recommendations, whose implementation would be the basis for the project to receive fi nancial support. The banks, however, went ahead and funded the project ignoring the concerns raised about the project. The Government of Uganda signed an agreement with IPS and BEL to construct the project in 2007 before Parliament approved the government’s obligation as required by law. BEL started the project construction in 2007 and expected to fi nish in three years, but the dam project was completed and commissioned by Government of Uganda in August 2012, fi ve years later. Despite several lender reports recommendations and reiterated effort from the project constructors some of the concerns raised by civil citizen groups are not resolved, and new ones have been raised during the process. These issues include; hydrological and climate change risks, cumulative impact assessment of the cascade of dams, economic and environmental analysis of alternative energy options, cultural and spiritual values, compensations for persons affected by the electricity transmission line as well as  persons injured during the dam construction.

Complaints about these unresolved issues have been raised by the concerned citizen groups and the dam-affected persons to the various institutions of the IFC, AfDB and EIB. The offi  ces of the Ombudsmen of the banks –Compliance Advisor Ombudsman (CAO) of the World Bank, the Independent Review Mechanisms of the African Development Bank, and the European Investment Bank’s Compliance Review all found the complaints legible and have been working with the proponents of the dam and government, and the dam-affected persons to address this issues. Several cases are still open as it has not been possible to come to a solution through a collaborative process.