UGANDAN PRESIDENT, Yoweri Museveni, launched construction of the US$550M Bujugali dam on the Nile river in January 2001, after the Ugandan government received World Bank approval for the project.

During the launch, Museveni criticised opponents of the dam, who had caused the project to be delayed by seven years. First proposed in 1994, the dam was not approved for construction until December 2001 due to concerns raised by environmentalists and some MPs. Museveni said he should have by now been attending the dam’s commissioning and not its construction.

The planned dam is in the eastern part of the country about 80km from the capital Kampala. It has came under intense scrutiny from opponents who complained that Bujagali was a ‘white elephant’ that would not bring electricity to the majority of Ugandans (95%) who are not connected to the grid, and that it would push up tariffs for those who are because they were unwittingly taking on the hydrological risk of the project. Other criticisms included that alternative sources of electricity were not seriously analysed, bearing in mind that developing Bujagali would interfere with tourist activity such as whitewater rafting, before getting the government green light.

AES Corporation, which is responsible for the construction, operation and maintenance of the dam, maintains that the Bujagali project site was selected as it is one of the most environmentally and socially benign hydro options on the Nile. Numerous village meetings, NGO forums, government meetings, cultural institution discussions, as well as radio, TV,and newspaper coverage have culminated in an eight-volume Environmental and Social Impact Assessment (EIA) report. This includes a Resettlement and Community Development Action Plan to address the environmental and social issues related to the project, with, the company claims, full transparency in line with World Bank guidelines.

Various allegations of corruption concerning the project have been brought to the attention of the World Bank’s Department of Institutional Integrity (INT). Although the opposing International Rivers Network says that there has been no public disclosure of the outcome of the ensuing investigation, INT has concluded that there was no evidence of corruption to date, and that it would monitor all payments in connection with the project as carefully as possible.

The World Bank, through its private lending arm the International Finance Corporation (IFC) and the International Development Agency, has committed US$215M in direct loans and guarantees for the hydro dam. The Bank’s board approved its share of the financing in December 2001. The balance of the funds will come from private lenders and equity capital, a senior company official said.

Mandated lead arrangers WestLB and ANZ Investment Bank have approached banks to expand the bank group to fund the commercial loan facilities for the project.