The Bujagali project in Uganda has come under fire again. A report commissioned by the International Rivers Network alleges that the power purchase agreement (PPA) signed by developer AES and the Ugandan government is badly flawed. The report, by India-based Prayas Energy Group, follows a 12 November 2002 ruling by the Uganda High Court that the terms of the PPA must be made public.
In its report, Praya says that the capital cost of the Bujagali project is excessively high – twice that of India’s Sri Maheshwar project, said to be similar in scope and capacity. The report examines the Bujagali PPA, which it says contains a number of ‘unusual requirements which are detrimental to Uganda’. Along with questions over the date of financial closure and the way capital is returned, Praya says yearly payments could be US$132M, not US$111M as claimed by the PPA and the World Bank. It says a more common type of PPA would save Uganda an average US$20M per year over the lifetime of the project.
It faults the World Bank for its review of the project costs, suggesting that its response was inadequate on everything from ‘soft’ costs that are ‘a major source of costs inflation’ to the lack of competitive tendering and high costs of electromechanical equipment.
In response to the report, the International Rivers Network said under the terms of the contract Uganda could and should cancel the project and consider using geothermal power. It said the African Development Bank’s proposed Uganda Alternative Energy Resource Assessment and Utilisation Study should proceed without further delay.
Bujagali’s qualification for the CDM is also under fire.
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