NGO’ Tell World Bank Bujagali Dam Is "Too Flawed"

A letter signed from 20 NGOs to World Bank executive directors on the project’s outstanding problems.

Franco Passacantando,
Executive Director, World Bank Group
Via Fax: 202–477–3735

Re: Bujagali Dam project, Uganda

We are writing to you to express our concern about the Bujagali Dam project in Uganda, which is currently being considered for funding by the World Bank (IDA), the IFC, and possibly MIGA.

We have been following developments related to this project very closely and have carefully evaluated its pros and cons as well as the concerns already conveyed by Ugandan and international NGOs. It is our opinion that the project is too flawed to go forward as planned, as it does not respond directly to the core needs of the vast majority of Ugandans. It is also likely to seriously impact Nile River fisheries, possibly including very rare species. The project also does not meet the guidelines and recommendations of the newly released report of the World Commission on Dams (WCD) on many important issues. Perhaps most disturbingly, it is likely to set off a wave of dam building on the White Nile whose cumulative impacts could be catastrophic.

A number of lenders have already declined funding and guarantees for this project, including Proparco, a subsidiary of Agence Francaise de Developpement (over corruption); the German development bank DEG (on environmental grounds), and the Export Credits Guarantee Department of the UK (for "unacceptable financial risks arising from the Ugandan power sector"). In addition, Swedish International Development Cooperation Agency (SIDA) has stated that the project seems "unfeasible" to them and that they are not likely to fund it.

MEETING THE NEEDS OF THE POOR
The WCD calls for a "needs assessment" to ensure that a project will actually meet local needs: "In countries where a large proportion of the population does not have access to basic services, a key parameter should be the extent to which basic human needs will be met." This information is not available on Bujagali. The Bujagali project is not likely to produce the positive developmental impacts for the poor that are expected to be at the core of all IFC and World Bank projects. The dam will not help meet the basic energy needs of the rural poor, as its exclusive focus on a conventional grid–extension approach will leave out the vast majority of the Ugandan population. The fact remains that the number of Ugandans who can afford grid electricity are a small elite.

This aspect was made clear by the 1996 Energy Sector Management Assistance Programme (ESMAP) report, "Uganda Energy Assessment," which states: "The prospects for Uganda Electricity Board (UEB) to significantly strengthen its national coverage to non–grid areas in the next 20 years are remote. Even if all of Uganda’s urban consumers were connected to the grid, it would still leave 75% of Ugandans without UEB grid electricity." Moreover, ESMAP goes on to affirm that "It is, however, unrealistic to think that more than a fraction of the rural population could be reached by the conventional, extend–the–grid approach. A more promising course is to rely, instead, on ’alternative’, ’non–conventional’ or ’complementary’ approaches to electrification."

It is not just the cost of electricity from Bujagali Dam that is prohibitive to local people (and only the project developer AES seems willing to assert will cost $.05 per KwH), but also the capital costs of first extending the grid to remote regions ($10,000 per km) and, more importantly for the consumer, paying for individual extensions. The notion that the majority of Ugandans could afford this capital cost is unrealistic.

While the Bank’s Energy for Rural Transformation loan has some components which would address the energy needs of Uganda’s majority, overall, this loan is also dominated by an "extend the grid" mentality – an approach which ESMAP and energy experts around the world say is not the best approach for countries with weak energy sectors like Uganda, and certainly not for the Uganda’s rural poor majority.

Finally, none of the Bank’s loans for Uganda’s energy sector deal with the nation’s single largest energy source – fuelwood. NGOs in Uganda have consistently called for a sustainable fuelwood program, but such assistance does not seem to be forthcoming from the World Bank.

OPTIONS ASSESSMENT
The World Commission on Dams report calls for a complete understanding of energy needs and a comprehensive evaluation of the best way to meet those needs before considering specific projects. The WCD also recommends that studies be made to assess the scope for "demand side management (DSM), and for decentralized supply options and community–level initiatives" and that "a priority should be to improve existing systems before building new supply, and DSM options should be given the same significance as supply options."

The analysis done for the Bujagali project does not meet the criteria described above. There is neither a comprehensive needs assessment for Uganda, nor a detailed study of the many approaches to energy supply that could meet those needs. There is no feasibility study for renewables such as solar and wind (although reportedly one is under way by the African Development Bank, it will obviously be too late to compare against this project). The only study on "alternatives" was undertaken by a dam–building company, Acres International, and it merely looked at a number of dam proposals and compared them to Bujagali.

IMPACTS ON FISHERIES
Remarkably, the project Environmental Impact Assessment states that the Bujagali dam will actually lead to improved fisheries in the region. In reality, scientists believe that not enough is known about Nile River fisheries to predict the full impacts of Bujagali. Les Kaufman, a biologist with the Boston University Center for Ecology and Conservation Biology, has studied the Nile fisheries in the Bujagali area. He recently stated in a letter to International Rivers, "First, the rapids habitats were not directly and systematically sampled, or at least the report does not indicate so. Second, two sets of samples I have examined clearly indicate the presence of species of haplochromine cichlids that are undescribed, and not yet known from anywhere else, plus one species, Neochromis simotes, that was thought extinct. The species from the rapids and pools areas exhibit adaptations suggestive of dependence upon rapidly flowing water; i.e., falls and rapids habitats that would be inundated by the dam."

Another fisheries expert, Ole Seehausen, who has been working with Ugandan fisheries experts to sample species near the dam site, recently wrote, "The results were astonishing. Most of the species were clearly previously unknown and possibly endemic. Some seemed specially adapted to life in rapids. The biggest surprise was that we re–discovered Neochromis simotes, a species that was believed to be extinct and had not been reported after 1911!"

It appears the dam could destroy the habitat of some very rare species – possibly even pushing some toward extinction. This information is not reflected in the project EIA. This situation seems dangerously akin to that of Kihansi Gorge Dam (Tanzania), in which endangered species were missed by the World Bank EIA, leading to costly mitigation measures and the potential extinction of species. More research on fisheries is clearly called for.

WAVE OF DAMS TO COME
Bujagali is likely to set off a wave of dam–building on the Nile which will take Uganda down a path of hydro–development that is inflexible, uneconomic and damages the environment and communities. Bujagali could be followed by three or more dams that would compound its social and environmental impacts (and up to 12 hydro sites have been identified, according to the "Acres Study" commissioned by the IFC). The World Bank and IFC are helping to set the stage for this cascade of dams – something that is even acknowledged in the Project Information Document for Bujagali, which states that the project is expected to "catalyze" further hydro development along the Nile. For all intents and purposes, there is the very real likelihood that at least two dams will be built if Bujagali is approved, and possibly more.

The World Bank seems predisposed toward both the Bujagali and Karuma projects. While the government has agreed that it will not allow a dam in the Murchison Falls area (a World Heritage site), it has resisted making such an unequivocal statement on Kalagala, the dam that is expected to have the greatest environmental impacts of those proposed. The agreement between the Ugandan government and the World Bank states only that, should Uganda "contemplate hydropower development at Kalagala" it must have a "satisfactory EIA" – hardly a guarantee that this sensitive area will be set aside in perpetuity. Because the World Bank has not gotten a firm commitment to "offset" Kalagala, and because it is fully aware that its approval of Bujagali could "catalyze" further dam construction, the World Bank Group has a responsibility to examine the cumulative impacts should multiple dams be built on the Nile.

In addition to future dams, Bujagali would be the third large dam project on this stretch of the Nile, after the Owen Falls Dam and Owen Falls Extension Project. The cumulative impacts of these dams will have a detrimental effect on the Nile ecosystems and local livelihoods. No environmental assessment has been carried out for either Owen Falls or Owen Falls Extension. Without knowing the impacts of these two upstream dams, the Bujagali EIA cannot adequately address the cumulative impacts of all three projects. This clearly contradicts the WCD recommendation that states, "Cumulative impacts of projects should be analyzed and environmental impacts from past projects should be evaluated and incorporated into the needs assessment." The Bank’s own policies would seem to indicate that, in this case, a sectoral EA should have been done, to evaluate the cumulative impacts of the existing and proposed dams. Such a study has not been done.

PARTICIPATION
Although project documents paint a picture of widespread public support for the project, there have been serious flaws in the participation process. For example, AES states that they have done "exhaustive" consultation, and that "the result was an independent local NGO survey indicating 96% project support, a national newspaper poll showing 85% support, and unanimous approval from Parliament." This survey is quite simply a tool for public relations. There are a few thousand Ugandan NGOs; the survey polled less than 50. A number of those polled have a strong vested interest in the project (e.g., the Uganda Investment Authority – created for the express purpose of promoting foreign investment in Uganda; the Uganda Manufacturers Association, and the Uganda Chamber of Commerce). But the selection of respondents is not the only problematic aspect of this survey. There were serious methodological flaws in the Steadman survey. Leading questions appear throughout the survey. AES has consistently used the survey to argue that levels of popular support for the project are higher than they are.

Many concerns by Ugandans have been summarily ignored or dismissed by the company and project proponents. NGOs in Uganda have written numerous letters of concern to the Bank and IFC, but have been virtually ignored. Here is just one of many letters sent to the World Bank which questioned the company’s participatory process:

"I am the Director of the Human Rights and Peace Centre, Faculty of Law, Makerere University, Uganda. I am expressing my concern about the proposed construction of a Dam at the Bujagali Falls in the Kingdom of Busoga, Uganda with the support of the IFC/WB. While I recognize the need for development, I also believe that we must bear in mind that development should be sustainable and beneficial to all humanity. The world today is suffering from a development process that has had total disregard for the environment. The consequences are well documented and known to you. Thus it has become part of human conscience that such reckless development process must be avoided. It is however surprising that powerful institutions and private companies do not care a damn. As a representative of a human rights organization, we protest against the decision to build the dam which was top down decision by the executive in Uganda, prompted by useless incentives from the benefiting company. Today we talk about participatory development but this is often an academic and public relations phraseology. While AES claims having consulted, that consultation has largely been with government .... Neither has AES bothered to consult with academic and human rights institutions such as ours." (Samuel B. Tindifa, Aug. 10. 2000)

LOSS OF CULTURALLY IMPORTANT SITE
The project will drown Bujagali Falls, a national treasure and culturally important site. The "Source of the Nile" corridor is one of the most spectacular river stretches in the world, say rafting experts, and is already the biggest draw for foreign tourists in Uganda. Tourism is the second largest source of foreign exchange in Uganda. According to rafting companies in Uganda, over 6,000 people raft the Nile each year near Bujagali, spending nearly $4 million a year in Uganda on activities not related to rafting, much of which goes directly to local communities. Ugandan NGOs have written to the Bank, "The opportunity cost in terms of revenue from tourism that will be lost to a dam at Bujagali was essentially ignored in the Bujagali planning documents. How will the IFC and World Bank evaluate the lost revenue from a thriving tourism industry in the Jinja area?" As far as we can tell, this question, along with many others from concerned citizens, have not been addressed by Bank staff.

The EIA and other project documents have downplayed the economic impacts the dam will have on the growing whitewater rafting and tourism industries, while indicating there will be increased tourism opportunities in the area and other economic benefits for local people from the dam project. In reality, the reservoir is not likely to draw tourists. The dam itself will employ only 29 people after construction, according to the EIA, and probably most of these will be foreigners. And although the Owen Falls Dam is right next door, the town of Jinja has been in steady decline for years. Civic leaders have expressed the belief that tourism is more likely to benefit their community in the long run than another dam.

PUBLIC RISK
As far as project–related risks are concerned, the World Commission on Dams calls for a fair analysis and public discussion of these: "[Risks] must be identified, articulated and addressed explicitly. Most important, involuntary risk bearers must be provided with the legal rights to engage with risks takers in a transparent process to ensure that risks and benefits are negotiated in a more equitable basis." It also specifies that: "Determining what is an acceptable level of risk should be undertaken through collective political process."

The planning process for Bujagali is troubling in its handling of risk. The key document that lays out economic risks – the power purchase agreement (PPA) – has been kept secret. However, the terms of the PPA reportedly force Uganda to buy all of the project’s projected power output even if there is not enough demand from consumers, and even in case of an energy glut or of a drought–induced reduction in energy production. The people of Uganda would pay the costs of this unfair deal, should the national utility be unable to meet its obligations. By potentially increasing the public debt of the country, this project would undermine actions undertaken by the World Bank to reduce the country’s foreign debt through the HIPC Initiative.

Another kind of risk is that directly experienced by the project affected people who might not receive the benefits allegedly promised by AES. No grievance mechanism is in place to allow local villagers to hold the private project sponsor accountable in case it does not deliver its promises for jobs, hospitals, schools and land.

There are many other concerns which we share with Ugandan NGOs, such as the lack of competitive bidding for the project and the resulting potential for corruption (in fact, project corruption is being investigated by the Bank’s anti–fraud unit); the serious unmitigable cultural loss caused by destroying Bujagali falls; and dam safety issues (should the Owen Falls dam, already in very poor condition, fail, "it would cause an environmental disaster all the way to the Mediterranean," according to former Bank environmentalist Gus Tillman).

CONCLUSION
We believe the WCD guidelines offer a good framework for ensuring this project does not do more harm than good. But on May 23, the IFC’s Ron Anderson told the Ugandan group NAPE that the project would meet only "relevant" WCD guidelines. We would like to know which guidelines the IFC finds relevant, and which irrelevant?

It is our opinion that the Bank and IFC have not yet met critical WCD guidelines on this project, and in fact that the project may not meet Bank policies. We therefore ask that no financial support be given to the Bujagali Dam project unless the following conditions are satisfied:

• the release and public discussion of the Power Purchase Agreement, so that risks to citizens of Uganda are fully understood;

• a thorough energy needs assessment, and a full and fair consideration of alternative energy approaches to meet those needs, following WCD recommendations;

• a comprehensive management plan for the Nile done by independent experts;

• further independent analysis of the impacts of Bujagali Dam on Nile River fisheries;

• a comprehensive EIA for the Owen Falls Dam and the Owen Falls Extension, and

• an assessment of the cumulative impacts of related projects now being considered.

If the World Bank should decide to fund this project without doing the above, it will be a clear statement that the Bank does not intend to incorporate the major guidelines of the World Commission on Dams into project planning. This runs contrary to commitments made by the World Bank in public statements (see, for example, the World Bank’s "Questions and Answers on the WCD").

We look forward to a prompt reply to our concerns.

Sincerely,