30 October 2009
With a price tag of $860 million and climbing, Bujagali is now amongst the most expensive hydropower plants in the world.
A Ugandan government document projects that the 250 MW Bujagali hydroelectric power station under construction on the Nile River in Uganda will in fact raise power costs despite claims by the project sponsor, Bujagali Energy Limited (BEL), that power tariffs would decrease once Bujagali becomes operational, reports the government-owned paper, New Vision. With a price tag of $860 million and climbing on news that unforeseen engineering challenges will further delay the project, Bujagali is now amongst the most expensive hydropower plants in the world.
Following its review of the Ugandan power sector, the World Bank is recommending a 5 percent increase in tariffs this year and a similar percentage increase next year in order to avoid “shocking” Ugandans with the inevitable price increase that will occur once the Bujagali dam is completed, according to the New Vision report. Under the World Bank’s proposal, Ugandans will be paying 26.4 cents, compared to the current tariff of 24 cents, by the time the project is commissioned in 2012. Questioned about the viability of the project, Uganda’s energy minister told New Vision that “it is a bad project, over-delayed, and over priced.”
This is in contrast to BEL’s claim that power tariffs would decrease to an average of 6 cents per unit. BEL has already adjusted the tariff from 6 cents to 13 cents when the project is commissioned in order to cover the increased costs of the project – validating NGO concerns, which were echoed by a World Bank Inspection Panel investigation, that the high cost of the Bujagali dam will be passed on to consumers and make electricity unaffordable for most Ugandans.
In 2007, the National Association of Professional Environmentalists (NAPE) in collaboration with other local groups filed a complaint over the Bujagali dam project with the World Bank Inspection Panel and the African Development Bank’s Independent Review Mechanism. The complaint highlighted many concerns which include: possible risks to the hydrology of Lake Victoria; anticipated impacts of climate change-induced drought on hydropower; the project sponsor’s failure to complete a comprehensive economic analysis that fully addresses alternative energy options, and; the harmful impacts on local communities, including inadequate compensation and resettlement plans.
In August 2008, the Inspection Panel submitted a critical report on the Bujagali dam to the World Bank Executive Directors identifying a range of problems in line with the findings of a July 2008 report of the African Development Bank’s Independent Review Mechanism. Both reports indicate that negative effects have not been adequately taken into account and question actual benefits for the local population. The Executive Directors met in December 2008 to discuss the Inspection Panel’s report and the World Bank Management’s Report and Recommendation which included a detailed Management Action Plan, which was endorsed by the Executive Directors despite NGO objection.
Teams from the Inspection Panel and the AfDB’s Independent Review Mechanism - which conducted its own investigation in close cooperation with the Panel - returned to Uganda this past May to convey the results of their investigations, answer questions and discuss commitments made by Bank Management in response to the Panel’s findings that need to be implemented. The teams visited the project area, resettled communities and other communities which will be affected by the project.
The team observed many remaining issues including conveyance of land titles in the resettlement site, income restoration activities and cultural and spiritual aspects of the project. They also observed to their surprise that fences had been built and that other construction and commercial activities were taking place at the Kalagala Fall offset site before a sustainable management plan for the area is completed.
The World Bank, which recently prepared a six month progress report on the implementation of its meager Management Action Plan developed in response to the Inspection Panel report, has made little progress in addressing fundamental problems with the project.
Resources
Bujagali Dam to Raise Power Costs, New Vision, September 25, 2009
The Co-Sponsor of Bujagali Project - Industrial Promotion Services (IPS) Says the Project Cost is NOT up, NAPE, October 13, 2009
Uganda's Bujagali Dam to Miss 2011 Target by Elias Biryabarema, Reuters, October 30, 2009
World Bank's Inadequate Response to Critical Inspection Panel Report on Bujagali Dam, Bothends
Feature: The Bujagali Hydro by Alex Halperin, ThisisAfricaonline
Management Progress Report (Inspection Panel website)