Ugandan citizens’ complaint against EUR 95 million EIB loan for Bujagali Hydropower Dam

Bujagali falls (photo International Rivers)

Bujagali falls (foto International Rivers)

Press Release, Brussels, 25 November 2009.

The Bujagali Hydropower Project is a 250-megawatt power-generating facility developed by Bujagali Energy Limited, a joint venture between Kenya-based Industrial Promotion Services (IPS), the Aga Khan Fund for Economic Development, and US-based Sithe Global Power, with construction by Italy’s Salini.

Following the findings of a field mission in Uganda in April 2009, the European coalition Counter Balance, in collaboration with Human Rights lawyers of Sherpa (France) and CLAI (Italy) has been supporting the Ugandan local communities, lead by the Ugandan National Association of Professional Environmentalists (NAPE) in gathering evidences in order to file a complaint against the European Investment Bank, following the successful outcome of the complaint filed against the World Bank through the independent World Bank Inspection Panel (1).

Frank Muramazi, Ugandan National Association of Professional Environmentalists (NAPE) video testimonial is available online.

The European Investment Bank has agreed to a EUR 95 million loan in 2007. According to the EIB last June, the EIB had disbursed 42.5 million Euros, thus nearly half of the total amount of the loan.

Because the World Bank is the leading financial supporter of the project, the European Investment Bank neglected its own specific due diligence and simply decided to follow in the footstep of its sister bank; ignoring, as it commonly does, Civil society‘s concerns that the project was unsustainable and even damaging to the local population as well as the environment.

The complaint filed today against the EIB has supporting evidences of the EIB’s:
1.   Failure to meet European development objectives
2.    Failure to assess the economic and environmental soundness of the project
3.    Failure to guarantee fair compensation to affected communities
4.    Failure to ensure the implementation of the mitigation measure

(see attached full text of the complaint to be sent to the EIB)

It is the role of the EIB to determine and check whether the social and environmental conditions for its financing are met.

We have evidences to prove the European Investment Bank failed to comply with its own policies and EU laws.

EIB’s lending for the Bujagali project comes from the Investment Facility managed by the Bank under the Cotonou Agreement, the resources of which are provided by EU Member States through the European Development Fund. Article 1 of the Cotonou Agreement states that economic, cultural and social development is the main objective of the Agreement and includes improving access to productive resources and supporting the conditions for an equitable distribution of the fruits of growth.

According to the project promoters, Bujagali Energy Limited: “The project will preserve the environment while producing substantial benefits for Uganda, including: Increased electricity supply; Lower electricity costs; Improved air quality; Jobs for Ugandan workers; Improvements for villages located nearby.”
We can demonstrate that:

– The project will benefit less than 5% of the population! Less than 5 percent of the Ugandan population is currently connected to the electricity grid. The project does not include any transmission line extension that would expand the number of people who have access to electricity, especially in rural areas. According to NAPE, electricity that could not be sold in Uganda has always been sold to Kenya at a bargain – way under the production  cost- price by the Ugandan government;

– Not only the Bujagali dam will not lower electricity tariffs but it will lead in higher electricity prices. Due to overestimation of the dam capacity, together with the terms of the Power Purchase Agreement, there is a high risk that the electricity produced will come at a price much higher than expected, and will only be affordable to the wealthiest segments of the Ugandan population;

– Destruction of Ugandan national treasure. By drowning Bujagali Falls – a spectacular series of cascading rapids which Ugandans consider a national treasure – the dam will submerge a place with great cultural and spiritual importance for the Busoga people. The falls site is one of the main national touristic places of the country and represents an important income generating activity in the region;

– 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;

– Naminya resettlement area : resettlement of displaced people was not done in accordance with EIB policies and conditions agreed;

– Evictions: affected people were not granted fair and adequate compensation. Most of the people were evicted in 2001, they were promised that the Project would improve their living conditions through access to electricity, water, employment on the construction site, a new market place, new schools, as well as boats and nets (for fishermen). Compensation only took place – when it took place – years later. The time in between the moment of their eviction and the moment when they received the compensation was never compensated or taken into account in any way.  Further, a number of evicted people were never compensated at all;

– Expected mitigation measures are still way behind schedule. Evictions and the first preparatory measures for the dam started as early as 2001-2002. The construction of the dam started mid-2007 and is progressing at a steady pace, expecting to be finished in 2011-2012. Yet, with regard to the next door Kalagala falls offset, the sustainable Management Plan has still not been adopted, and while tourism facilities are being constructed, there is still no certainty as to what will happen to Kalagala falls. This raises doubts as to the Ugandan Government’s intentions, as there is no legally binding, long term commitment on its part not to use Kalagala falls for yet another hydroelectric power project.

We thus demand that the European Investment Bank stops giving any more money until:
    –  The Bank undertakes an independent study on the impact of the project on fisheries and on the water level of the Lake Victoria, as well as an additional, independent assessment of the electricity expected to be produced, taking into account all relevant factors including climate change risks (2);

    – The various legal cases concerning the compensations (the complaint filed by 557 on the transmission line compensation and the caveat issues) filed in domestic courts are settled;
    – Measures are taken so as to guarantee and ensure that the Kalagala offset will be promptly and effectively implemented.

More specifically, with regard to the impacted communities, our requests are that before any new disbursement is made, the following actions are taken and fully implemented:

– The Bank’s staff meet with representatives of affected people and civil society interests, including NGOs, listed below, so as to develop a constructive dialogue with all stakeholders (3);

– The compensation process is reviewed so that all people affected by the construction of the dam as well as the transmission line are compensated in a fair and adequate manner;

– New unexpected impacts, such as cracks resulting from excavation works, material and psychological nuisance caused by repetitive blasting, are also subject to compensation;
- All people affected by the construction of the dam and/or of the transmission line are granted access to electricity;

– With regard to the people resettled in Naminya, the promises made by BEL are fulfilled, including : construction of a primary school; provision of running water and electricity, construction of a market place; expansion of the land granted so as to compensate the loss of their former income; organisation of a training in microsaving finance;

– Affected people are granted equal access to jobs on or related to the construction site;

– Cultural and spiritual impacts are mitigated and compensated in a fair and adequate manner.

Press contacts

Counter Balance:
Caterina Amicucci, Reform the World Bank Campaign (Italy), +39 349 852 0789

LAWYER
Me Joseph Breham, Sherpa (PARIS) Tel : 00 33 (0)1.42.60.32.60
UGANDA
Frank Muramuzi, National Association of Professional Environmentalists, (Kampala)
: +256.414.534453, Mobile: +256.772.492362; nape@nape.or.ug, Skype: frank_nape

Online resources:

Read the full complaint here

National Association of Professional Environmentalists
Bujagali general information available here
World Bank Inspection Panel report available here

Notes to the Editors

(1)    Retroact

On 5 March 2007, the Ugandan National Association of Professional Environmentalists (NAPE) and other Ugandan citizens and local organizations filed a complaint with the World Bank Inspection Panel, raising concerns about potential violations of World Bank policies.

On 2 May 2007, a group of International NGOs requested the board of directors and the EIB president to postpone the vote until the outcome of the Panel’s Eligibility Visit before considering support for the Project. The EIB approved the loan nonetheless.

On 8 September 2008, the World Bank Inspection Panel released the investigation’s report finding important areas of non-compliance with the World Bank’s policies and guidelines, on the following issues:
    Environmental issues
    Hydrological and climate change Risks
    Involuntary resettlements
    Cultural and spiritual values
In addition, the Panel has identified critical elements on the Economic and Environmental Analysis of Alternatives.

(2)    Environmental Statement (2004), p.6. “At all stages the EIB mainly works with information provided by the promoter. This will be supported by information and analysis requested and even financed by the Bank. It may also be supplemented by information and analysis obtained from third parties and complemented by on the spot visits.”
(3)    Environmental Statement (2004), p.6. “The EIB works with national and regional authorities. It also seeks to develop a constructive dialogue with the public, including representatives of civil society interests, such as NGOs and industry and consumer organisations, on its general approach on the environment, as well as, usually at the local level, on the environmental aspects of individual projects.”

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