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dam-l (Fwd) Uganda dam/LS
------- Forwarded Message Follows -------
Date sent: Fri, 16 Apr 1999 13:55:25 +0100
From: lori@irn.org (Lori Pottinger)
Subject: Uganda dam/LS
To: irn-safrica@igc.org
Here is an article that is in the April 1999 issue of World Rivers
Review,
published bimonthly by IRN, on a bad dam project being pushed by
an
American company in Uganda. We just heard that Uganda's
president (who is
pro dam) recently fired all his ministers, supposedly for corruption
over
the project (which is rife), but kept the only really pro-dam minister
(energy).
Lori
--------------------------------
Proposed Uganda Dam is Drowning in Difficulties
by Stephen Linaweaver
The proposed Bujagali Falls hydropower project in Uganda has
suffered
serious setbacks in recent months. In January the Uganda Electricity
Board, Uganda's state-run utility, refused to sign the Power Purchase
Agreement (PPA) proposed by project developer AES, Inc. A month later the
Uganda Parliament refused to approve the project, based on problems with
the PPA. In February, the World Bank, which has been brought in to review
the power agreements, slapped a one-year suspension on the signing of the
PPA, according to the Uganda Monitor, Uganda's leading daily. Then on
March 16, a local environmental organization filed an injunction to stop
AES from reaching an agreement with the government before the project's
environmental impact assessment is approved.
The US-based AES, Inc.- the largest independent power-producer in the
world - proposes to build a 290-megawatt hydroelectric plant with a
30-meter-high dam on the Nile River, 50 miles east of Uganda's capital
city of Kampala. The project is the first private power project in East
Africa. According to the Uganda Monitor, Uganda's leading newspaper, the
dam's $523 million price tag is greater than 16 percent of the gross
domestic product of Uganda.
The proposed dam would flood a 10-mile swath of the Nile corridor,
including the Bujagali Falls, a spectacular series of rapids which are a
popular retreat for tourists and whitewater rafters. It is also likely to
harm water quality, increase water-borne illnesses, increase water
hyacinth infestations and harm fisheries. Almost 200 hectares of
productive agricultural land will also be lost to the project, amounting
to an annual loss of US$675,000 at current prices, according to project
documents. Potential resettlers have complained that their lands have been
undervalued in project appraisals.
The Victoria Nile is already dammed by the Owens Falls Dam, built in 1954,
and the Owens Falls Extension Project, currently under construction. Both
of these projects are within 10 miles of the proposed Bujagali Falls Dam.
Leaders of the Busoga Kingdom, some of whose people would be displaced if
the dam were built, have publicly condemned the project, stating that the
Bujagali Falls themselves are of "great social and cultural significance"
to their society. Moreover, the Busoga argued that the societal costs of
the dam - which would displace hundreds of families and affect an
additional 6,000 people - far outweigh its benefits. Many have raised
concerns about the loss of the thriving ecotourism industry, a business
which brings in as much as $600,000 per year in tourism dollars to local
towns, mostly from whitewater rafting expeditions.
The project's most organized opposition has been the "Save Bujagali
Crusaders," a coalition of locals residents and environmentalists formed
in early 1998 by Martin Musumba, a former District Chairman. The Crusaders
have argued that the falls are one of Uganda's great national treasures,
and that the dam is unnecessary. Current demand for power in Uganda will
be met when the 200 MW Owens Falls Extension Project is completed in the
year 2000. The Save Bujagali Crusaders have been a thorn in the side of
the AES Corporation, constantly informing the public of the project's
impacts and stating their case before the Ugandan Parliament.
Unfair Power Agreements
In the past few months, however, AES has run across far more serious
stumbling blocks. On January 20, the Uganda Electricity Board refused to
sign the Power Purchase Agreement with AES. The UEB was especially
concerned by a clause that stated they would have to buy all the potential
power produced by AES at a set price, regardless of whether or not the
power was actually produced. Such a deal, while often sought by hydropower
companies, can be crippling to a developing nation such as Uganda.
On February 18, the Parliament refused to approve the construction of the
dam, citing several problems with the controversial Power Purchase
Agreement. The PPA states that the Uganda government must buy the power
produced by AES if the Uganda Electricity Board fails to do so. Isaac
Musumba, the Chairman of the Parliamentary Committee on the National
Economy, stated Parliament's concerns publicly in the Ugandan press,
sparking debate and arousing suspicion about the project among citizens.
Parliament's greatest concern was the hydrological guarantee of the PPA.
This clause states that the UEB, or alternatively the Uganda Government,
must pay for the full capacity of the Bujagali Falls Dam, not necessarily
the actual power produced. If Lake Victoria drops significantly and the
flow of the Nile decreases, Uganda will still be forced to pay for power
that is no longer being produced. Other major concerns of Musumba and the
Parliament revolve around the need for external markets to make the
project feasible. According to the Parliamentary Committee on National
Economy, 265 of the 290 MW produced by the Bujagali Falls Dam would have
to be sold to neighboring countries to cover the cost of the project.
Furthermore, the Committee fears that once transmission and distribution
costs are added, the majority of Ugandans will be unable to afford the
power. More than 90 percent of Ugandans live in rural areas with no access
to a power grid.
Finally, Parliament raised the crucial point that the loss of tourist
revenue from Bujagali Falls, as well as the loss of the aesthetic value of
the Falls themselves, has not been included in factoring the cost of the
power. With these figures included, building a dam at Bujagali Falls would
make the effective cost of power even higher.
Although all parties involved say they will re-assess the Power Purchase
Agreements, AES faces yet another hurdle. The project's environmental
impact statement (EIS), released in February 1999, still must be approved
by Uganda's National Environmental Management Authority (NEMA).
In mid-March, the locally based National Association of Professional
Environmentalists went to court to postpone negotiations on the project's
power purchase agreement until NEMA has acted. According to the Ugandan
newspaper New Vision, the group has requested a temporary injunction
against AES from executing an agreement until NEMA has approved the EIS.
The group's lawyers said the approval of the project by Parliament before
the approval by NEMA is illegal. The lawyers argued that members of the
public need to know whether AES has addressed all environmental issues
before the government commits itself to buy the project's electricity.
Meanwhile, a February 11 article in the London-based Financial Times
reports that the project's future is even "further clouded by another
project" which is more economical, more flexible and with fewer
environmental impacts. The Norwegian-proposed Karuma Falls hydro facility
would use underground sluices rather than a dam, and would produce 200
megawatts at less than 5.5 cents per kilowatt/hour. The Uganda Parliament
was recently presented with a full project proposal, according to a March
18 article in New Vision. The project development team told the newspaper
their sources of financing were only waiting for a go-ahead from the
Uganda government.
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
Lori Pottinger, Director, Southern Africa Program,
and Editor, World Rivers Review
International Rivers Network
1847 Berkeley Way, Berkeley, California 94703, USA
Tel. (510) 848 1155 Fax (510) 848 1008
http://www.irn.org
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
Dianne Murray, Coordinator/Webmistress
Dam-Reservoir Working Group; Ottawa, Canada
Dam-Reservoir Impacts and Information Archive
http://www.sandelman.ottawa.on.ca/dams