Falling for AES's Plan? Uganda Debates Damming the Nile

by Stephen Linaweaver

Uganda is a lush, land-locked country tucked between the tropical forests of the Democratic Republic of Congo, and the expansive, dry plains of Kenya and Tanzania. More than 20 percent of the country's surface is covered in water. Uganda is home to the world's second largest lake, Lake Victoria, as well as the source of the world's longest river, the Nile. In its more than 4,000 mile journey to Cairo and the Mediterranean, the Nile drops more than 4,000 feet. Over half of that descent occurs in Uganda, a fact which has hydropower developers eager to set up shop.

But the dam lobby faces several obstacles in its efforts to convince Uganda to invest in dam construction -- not the  least of which is the fact that the country appears not to need the new power which the dams would provide.

Uganda's dam debate now centers on a proposal by the U.S.-based AES corporation, the largest independent power producer in the world, to construct a $523 million, 290 megawatt (MW) dam near Bujagali Falls on the Nile. The 22-meter-high dam would be built 10 miles below two other large dams, the Owens Falls Dam, built in 1954 during British colonial rule, and the Owens Falls Extension Project, currently being constructed by the Canadian firm Acres International Limited.

The Ugandan Parliament has repeatedly criticized the Bujagali project, but with President Musevni strongly supporting the proposal, all eyes have turned to the National Environmental Management Authority (NEMA), an autonomous arm of the Ugandan government.

AES is currently waiting for NEMA's approval, or rejection, of the Bujagali proposal.

The delay has frustrated company officials, who had hoped to request formal funding from the International Finance Corporation, the private lending arm of the World Bank. Instead, the IFC has pulled back from the project and undertaken a study of Uganda's energy potential.

The Save Bugagali Crusade

Leading the charge against the AES dam proposal are more than 1,000 Save Bujagali Crusaders. Martin Musumba, a former district chairman (equivalent to a governor in the United States) organized the Save Bujagali Crusade in July 1998.

The Save Bujagali Crusade has carried the banner for hundreds of people who would be displaced by the project, and for Bujagali Falls, which would be obliterated by AES's plans.

The Bujagali Falls project would create a 390-hectare reservoir, flooding the Nile all the way to the base of the existing Owens Falls Dam.

According to AES's environmental impact assessment, the dam would displace 820 people and affect an additional 6,000 people, including by submerging communal lands, burial sites or portions of their land.

The Jinja District, where the dam would be built, is one of the most heavily populated non-urban areas in the country, and replacement land for those who would lose homes or crops is practically non-existent in the area. Many of the families that would be displaced have been in the area for generations.

In addition, the reservoir is expected to increase serious water-borne diseases like malaria and schistosomiasis. Stagnant pools of water are breeding grounds for malaria-carrying mosquitoes and schistosomiasis-spreading vector snails.

Bujagali Falls is a spectacular series of cascading rapids which Ugandans consider a national treasure. The AES project would completely inundate the falls, "destroy[ing] this first class magnificent treasure of Uganda," according to Musumba.

With the true "Source of the Nile" submerged by the Owens Falls Dam in 1954, Bujagali has become a popular site for Ugandans as well as foreign tourists.

Bujagali is also a cultural and religious site, where the "Spirit of Bujagali" has had a storied association with the Falls for centuries. The Spirit is the cultural embodiment of the community, and is believed to protect the community from harm by performing rituals at the Falls. The current spirit -- an actual person who lives in a mud hut 100 yards from the Falls -- is the thirty-ninth.

AES's project environmental assessment dismisses the falls as "attractive but not exceptional," and states that the Spirit of Bujagali is willing to move to another site.

Musumba has not been the only voice speaking in opposition to the Bujagali Project. The National Association of Professional Environmentalists (NAPE), a group of Ugandan lawyers, commented in a recent statement that "humanity is waking up to the realities of cultural, ecological, and environmental disruption by huge hydro-power dam projects."

Oweyagha Afunduula, NAPE's leader, says that NAPE's mission is to "reverse the degradation of the River Nile system, and support the protection of local communities and the restoring of the well-being of the people, cultures and ecosystems."

AES's Christian Wright brushes off local opposition as an inevitable but manageable feature of large dam proposals. "A project this size will always have someone taking an issue against it," he says.

But local controversy escalated beyond the norm in December, when the Uganda Confidential, a Ugandan political monthly, alleged that AES had bribed the then-Energy Minister, Richard Kaijuka. The Confidential reported that AES had paid Kaijuka $240,000 to support the Bujagali Falls Hydropower Project, and that AES had promised Kaijuka a further $260,000 if he could get a controversial Power Purchase Agreement signed. Although Kaijuka was fired as Energy Minister soon after the article was printed, no further investigation of the incident was conducted.

"There was no justification, no proof," says Wright of the allegations.

According to Wafalu Ogutu, the Uganda chapter director for the international corruption watchdog organization Transparency International, "Nothing has been said again about [Richard Kaijuka] having got a bribe from AES Power. É I am not sure whether anybody is investigating the matter, or whether the man was dropped simply to be saved from a possible investigation."

AES's Wright has a simple explanation for Kaijuka's firing: "The cabinet was rotated as a result of frustration on the part of the executive that the AES project was not progressing fast enough."

AES's Power: Who Needs It?

The standard debates about the costs of dam building -- displacement of communities, environmental harm, destruction of tourist attractions -- versus the benefits of energy provision may obscure special features of the Uganda case. Notably, the country does not appear to need most of the new power that would be generated by the dam, and it has cheaper alternatives available.

The industry publication Hydropower and Dams estimates Uganda's energy demand will be 320 MW by 2000. With the 180 MW Owens Falls Dam and the 200 MW Owens Falls Extension (to be up and running in 18 months), Uganda appears to have a surplus of power.

Moreover, with only 5 percent of Ugandans currently connected to the national power grid, large hydro is not likely to bring power to Ugandans now without power, due to the expense of extending the national grid to remote areas.

Given the present surplus, the limited reach of the grid and the insolvency of Uganda's ailing electricity parastatal, the Uganda Electricity Board (UEB), AES is worried that there may be no one to buy the power it is so eager to produce for Uganda.

The company has sought a binding guarantee from the Parliament that the Uganda government will purchase the power directly in the event UEB fails to do so.

Parliamentarians, however, are nervous about making such a guarantee, and they are not the only Ugandans who are skeptical.

"There is no reason the country of Uganda should be subsidizing a major multinational corporation like AES," Musumba concludes.

Such a government commitment would constitute a real burden on generations to come, says Musumba. AES power may cost as much as 12 cents per kilowatt -- about twice the cost in the United States -- in a country where two thirds of the population lives in severe poverty.

A sounder investment than a blank check to AES, say critics, would be modest expenditures to fix the poor transmission lines responsible for an annual average loss of 30 percent of the power produced by the Owens Falls Dam.

If more energy is needed nonetheless, Save Bujagali Crusaders prefer a different power plan, a 200 MW, $350 million hydropower project at Karuma Falls in Northern Uganda by the Norwegian firm Norpak. Instead of a dam and reservoir, Norpak has proposed an underground sluice. According to Norpak, and the Save Bujagali Crusade agrees, the Karuma project would be cheaper, more flexible and less environmentally destructive than the Bujagali Falls dam. The Karuma Falls area is far less populated than the area surrounding Bujagali.

The recurring difficulties faced by AES have encouraged Norpak to move ahead quickly with plans for its project. Norpak has completed its environmental impact assessment, and the new Minister of Energy, Syda Bumba, has officially endorsed the Norwegian project.

Christian Wright remains confident the AES project will proceed, however, saying, "The general feeling is that both projects will be needed."

Whether both projects do in fact proceed may turn in large part on whether Uganda can secure power purchase commitments from neighboring Kenya.

The Bank Hesitates

Although Museveni and his cabinet appear to remain firmly committed to building both Karuma and Bujagali, Uganda will face an uphill fight to get funding for both projects.

With questions regarding demand and transmission arising, and clashes between anti-dam campaigners and hydro-developers increasing, the World Bank's International Finance Corporation has been forced to take a step back from the Bujagali Project, which it was eagerly pursuing in the early stages, and instead review all potential energy supply projects for Uganda's energy sector. While AES has not formally asked IFC for funding, it is expected to make a request soon.

Ron Anderson, principal environmental specialist for the Environment Division of the IFC, is openly reserved about moving forward quickly in Uganda. "The issues in Uganda are very complicated," Anderson says, "A project on the Nile may require both a sectoral environmental assessment, looking at economic issues, as well as a regional environmental assessment, looking at the power demand in East Africa. Big hydropower on the Nile may not win out."

The IFC has commissioned a review of various options for meeting electricity demand in Uganda, with a final report expected in October 1999. The review, commissioned in March 1999, is being carried out by Canada's Acres International with Kagga and Partners Limited, a Ugandan consulting firm. While the study will reportedly not prioritize projects, Anderson says, "it will consist of a list of projects which are possibilities in the eyes of the IFC." It remains to be seen whether a dam consulting firm will provide a fair assessment of options other than hydro.

AES desperately wants its project to be on the IFC list, and may be counting on its past strong relationship with the IFC to get it there. The IFC is currently working with AES in three other countries, and has worked with the company several times in the past.

The Solar Alternative

In Uganda, the potential for alternatives to large hydro is strong. A 1996 World Bank/ UN Development Program study rates Uganda's solar conditions as favorable, and the U.S. Department of Energy lists Uganda's solar potential between 4 and 6 kilowatt-hours per square meter. A critical benefit of solar in a country such as Uganda is that it does not require connection to the national grid, negating the need for huge capital investments to make electricity available to the rural population.

Photovoltaic solar systems have already proved successful in the region. In neighboring Kenya, more households get their electricity from the sun than from the national grids, according to the Economist, and South Africa is currently installing solar panels on 30,000 homes currently without power.

Poor countries do not have unlimited resources to make capital investments in imported technologies and services. A commitment to big hydropower now -- especially if accompanied by promises to buy any excess energy in the future -- may preclude Uganda from instead traveling down the solar path.

Stephen Linaweaver, a former resident of Uganda, lived near the site of the proposed Bujagali Falls dam. He wrote this article while an intern at the International Rivers Network in Berkeley, California.