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dam-l Uganda dam/LS
The following article about the proposed Bujagali Falls Dam in Uganda is
from a web site by the Save Bujagali Falls campaign in Uganda
(http://www.uganda.co.ug/bujagali/). This article follows up on an article
I sent in April, from our own publication, World Rivers Review. This author
makes very cogent arguments against this proposed privately built and
operated dam (proposed by the American company AES), which would destroy
the beautiful Bujagali Falls on the White Nile and create power that was
unaffordable to the vast majority of Ugandans. Contact IRN for more info on
this campaign.
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In this fourth paper we wish to start by expressing our appreciation of the
overwhelming support we have received from all those who read our first
three
papers. The letters, telephone calls and individual contacts have been very
encouraging. It is now clear to us that Uganda has a vibrant civil society.
The
struggle is on and success is ours.
Let us start with an article by Christian Wright, Country Directo,r AES
Nile Powe,r entitled, "Why we need Bujagali dam" that appeared in the "New
Vision"
of Monday, February 8th, 1999, and the clarification and response by the
Minister of Energy and Mineral Development, Hon. Richard Kaijuka on issues
raised by Parliamentary committees. Save Bujagali Crusade wish to present
our reaction to the above submissions.
ACCESSIBILITY TO AND DEMAND FOR
ELECTRICITY
Mr. Wright stated that less than 5 % of the population
have access to electricity leaving the rest to rely on the
quick diminishing resources of charcoal and wood fuel
for energy. We wish to make it clear to the Uganda
population that the major question that should be
addressed by any serious investor is not access to
electricity but its demand. It is a well established fact,
according to research by the statistics department, that
over 65% of the Ugandan population live below the
poverty line. Another 20% of the population, mainly
the middle class, are just surviving.
This means that less than 15% of the Uganda
population can afford electricity. The demand for
electricity is very low not high as Mr. Wright and some
government officials would like Ugandans to believe. For this reason the
Rural electrification Program has been shelved by government because donors
consider it un-economical. Also, that is why the current demand is
estimated at only 230 MW with only 5 % of the population having access to
electricity. The rest of the population have no choice but to continue to
use fuel wood and charcoal due to the high cost of power and high level of
poverty.
Production of more electricity will not reduce use of fuel wood and
charcoal until deliberate Programs are evolved to reduce poverty and the
cost of
power. Efforts to produce more power should go hand in hand with plans to
increase demand for power.
Demand for power call be increased by either increasing the economic status
of the population. reducing the cost of power or a combination of the two.
As evidenced during the recent Presidential Tour of the Luwero Triangle,
the economic policies currently being pursued have not led to improvement
in
peoples incomes. The credit schemes like Entandikwa have not been
successful. More well-planned and better managed poverty alleviation
programs are
yet to be put in place.
Several examples are available to illustrate this issue: Budondo
sub-county, Jinja District is the sub-county where the Owen Falls Dam is
located.
Electricity generated at the dam has been transmitted to distant districts
in the country and neighboring countries, but the same power has not
reached
Bujagali Village in Budondo sub-county. It is unrealistic that the
residents of Bujagali hope to get electricity from the proposed AES Dam,
yet they cannot
get power from Owen Falls dam in the same sub-county.
REDUCING COST OF POWER
Ivukula sub-county with over 26,000 people deep inside the rural areas of
Busiki county, Iganga District, 30 miles from Iganga Town has a three
phase-electricity line. However, there is only one bulb at the home of
Iganga District Speaker, Mr. Baite Munobwa burning. UEB staff go there once
a
year to collect charges because it is uneconomical. It is also true that
availability of electricity alone without any other programs to alleviate
poverty does
not lead to economic development. Naigobya town in Luuka county which used
to be very busy and fast growing in the 1970s is now a ghost town, with
three-phase electricity.
The cost of power can be reduced by reducing cost of power production and
improving power distribution and management. UEB should purchase
power from the cheapest Independent Power producers (IPP). The power to be
produced by AES/Nile Power is very expensive and not affordable.
According to Power Purchase Agreement, AES/NIP power will cost US cents 6.5
KWH at source. Transmission costs are estimated at US cents 3
bringing the cost of power to US cents 9. According to Hon. R. Kaijuka's
clarification to parliamentary committee on National Economy, the maximum
consumer tariff for AES/ power, power will be US cents 12 in current dollar
terms. The power to be produced by AES Nile Power is too expensive for a
developing country like Uganda.
Comparative prices of electricity (US cents) for selected developed and
developing countries are as below:
PRICE IN US CENTS PER KWH
Developing Countries
Residential
Industrial
India
3.6
3.4
Korea
3.0
1.3
Philippines
1.7
0.9
Thailand
5.3
2.4
Industrial Countries
Residential
Industrial
Japan
3.4
1.2
USA
2.4
0.9
Source: Economic Development Institute
of the World Bank.
Taking into account the per capita income of the above countries, the cost
of power of US cents 12 in Uganda with per capita Income of US $ 240 is
absurd. The comparative prices of electricity circulated by AES corporation
have been fabricated by the company to mislead Ugandans.
Hon G. Opio, an authority in the field of Financial Management and a senior
lecturer in Makerere University Business School confirms that the AES Nile
power is producing power at a very high cost. In a working paper on the
Generation of electric power, Hon G. Opio presents the "Rule of thumb"
estimation: To generate 1 MW of electric power we need US $ 1 million
minimum or US $ 1.5 maximum.
Therefore the minimum costs of producing 250 MW by AES Nile power is US $
250 million and the maximum cost is US $ 375 million. The cost of US
$ 500 million AES/Nile power cannot be explained in economic terms!
After taking into account the other assumptions made by AES Nile power. Hon
G. Opio estimates the minimum cost of producing I KW per hour to be
US cents 2.4 and the maximum possible US cents 3.6. NORPARK is ready to
supply power from Karuma Falls at only US cents 4.8 per KWH. This
cost is acceptable since it satisfies the rule of thumb if you take into
account dam location costs.
EXPERIENCE OF AES
Save Bujagali Crusade is therefore alarmed to learn that government and UEB
prefer to buy electricity from the expensive source first. The decision is
irrational and is not in the best interest of this country. The experience
of AES in power production at high cost outside Africa is therefore
irrelevant.
Africa has its own unique problems and therefore direct importation of
power and other projects cannot work. This explains why there is not a
single
successful power project developed by IPP in Africa. The major problem in
the power industry where African countries need more technical expertise is
in distribution and management.
POWER DISTRIBUTION AND MANAGEMENT
On power distribution and management, it is well documented by, among
others, the several IDA/World Bank missions, that UEB's poor performance
is the most pressing issue confronting the power sector in Uganda. UEB is
characterized by high power losses estimated at 40%, low collection rates
with Accounts Receivable standing at well over shs 60 billion and poor
quality service. The current observed power shortage of about 40 MW is more
a
result of high energy losses than inadequate power production.
AES/NIP also wish to divert peoples attention form the controversial
Bujagali power project by ighlighting the shortfalls witnessed in the Owen
Falls
Extension Power Project. It should be noted that the two projects are
handled by the same Ministry. It should be emphasized that government is
poised to
lose more money under the AES/NIP project. US $ 80 million is likely to be
spent on purchasing power which shall not be utilized for over 10 years.
Government will also lose over US $ 60 million from Tourism annually that
can be generated from Bujagali falls.
PRIVATISATION OF UEB
Mr. Wright has also asserted that the Bujagali project will enhance the
privatization of UEB. This is false. It has been properly stated in the
background
to the Budget 1998/99 page 112, that one of the major impediments to have a
significant impact on the privatization of power distribution is the size
of the
liabilities associated with the distribution business e.g. costly power
agreements the new owner will bear or pass on to governments. What is
certain is
that restructuring and privatization of UEB and putting in place a good
policy and institutional frame work on the power industry will definitely
attract
more investors in the power industry, like it has done in other sectors.
The future of UEB should therefore be resolved before government concludes
a power purchase agreement with AES, and any other investors.
Since the Hon. minister Kaijuka has assured the nation that harmonization
of the draft Electricity Bill with the multi-sectoral law is soon too be
concluded, let us wait and have the electricity bill passed bv parliament
before the AES Nile power project is approved. We strongly believe that
with a
good power management law and institutional framework in place, government
may not need to guarantee power purchase. Uganda needs more expertise
in power distribution and management.
ENVIRONMENT IMPACT ASSESSNENT
On the environment impact of the Dam, the assessment study should be
carried out by Independent consultants. In the Bujagali Project, AES the
beneficiary, has contacted a firm to carry out environment impact
assessment study single handedly. They have the capacity to influence the
nature of the
report.
Save Bujagali Crusade is opposed to the decision by NEMA to let the
contractor (AES) to carry out their own environmental impact assessment.
NEMA
should also review and approve the report basing on the experience of other
dams elsewhere to ensure that the environment impact are catered for- the
project before Parliament approves the project. This means therefore that
signing a power purchase Agreement with AES/Nile power ensures that the
power distribution will not be privatized, contrary to government policy.
This is the fourth in a series of papers the Save Bujagali crusade is
writing to sensitize political leaders. Civil Society, NGOs and the entire
public on the
negative effects of destroying Bujagali Falls.
Anyone interested in the cause is requested to send us an e-mail on
bujagali@infocom.co.ug or on telephone:
256-41 250274 and Fax: 256-41 250274
MARTIN M. MUSUMBA
COORDINATOR - Save Bujagali Crusade.
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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
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