Bujagali dam, Uganda

The USD 799 million Bujagali Dam in Uganda will flood Bujagali Falls, a national landmark comprising a 388 hectare reservoir. Construction is expected to take place between 2007 and 2011. In May 2007 the EIB agreed to provide USD 130 million in project finance. Other donors include the World Bank Group (USD 360 million in loans and guarantees) and the African Development Bank (USD 110 million). The project is being developed by Bujagali Energy, a joint venture between Kenya-based Industrial Promotion Services and US-based Sithe Global Power, with construction being carried out by the Italian company Salini.

The Bujagali project has been criticised on economic grounds and contested for years by activists in Uganda and internationally. This is due to its lack of protection for endangered fisheries and tourism in the area, its potential to harm Lake Victoria, and its inability to bring affordable power to the majority of Uganda’s population. The project has also been stalled for several years due to the persistence of corruption.

By drowning Bujagali Falls – considered by Ugandans to be a national treasure – the dam will submerge a place of great cultural and spiritual importance for the Busoga people. The project will also directly affect the livelihoods of about 6,800 people, impact fisheries, and submerge highly productive agricultural land and islands of high biodiversity. Some villagers have already been resettled for the project, with poor results.

Bujagali’s cost has doubled from the time it was first proposed until it was approved. Frank Muramuzi, of Uganda’s National Association of Professional Environmentalists, has said: “The project’s high cost will further limit funds available for rural electrification, and will likely lead to reductions in tariff subsidies for grid-connected users. Uganda already has the most expensive power in the region, and recent tariff hikes have pushed more people out of the already limited market for electricity.”

Due to the numerous hydrological risks, the project will make Uganda more vulnerable to drought, as the dam will increase Uganda’s dependence on one short stretch of the Nile for all of its electricity for some time to come. Such factors have been downplayed by the project promoter as well as the banks involved. The high costs of the investment will also be a major burden for the country’s budget and may “lock in” the rural majority of the Ugandan population to decades without power.

In spite of all the arguments and local opposition, the EIB Board approved the loan for the project without waiting for the findings of the World Bank Inspection Panel which is currently investigating a complaint from Ugandan NGOs.

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