FINANCE: African Dam Fails Global Benchmarks – Study

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Feb 27 2007 (IPS) - Two international non-governmental organisations say a controversial dam in Uganda that is getting funding from the World Bank deserves failing marks for coming up short on economic viability and transparency standards set out in a highly-acclaimed international benchmark study on dams.

Two international non-governmental organisations say a controversial dam in Uganda that is getting funding from the World Bank deserves failing marks for coming up short on economic viability and transparency standards set out in a highly-acclaimed international benchmark study on dams.

The International Rivers Network (IRN), a California-based advocacy group, says in a new report that the Bujagali Dam on Lake Victoria in Uganda does not comply with most of the priorities outlined in the World Commission on Dams (WCD) report, titled “Dams and Development: A New Framework for Decision-Making”.

The November 2000 WCD report, which was more than two years in the making and reviewed the impacts of hundreds of dams worldwide, stressed the importance of economic viability, public acceptance, transparency and adequate environmental impact assessments. It has often been cited as a standard-setter for major projects and dams, especially among environmentalists.

Compliance with the WCD recommendations is deemed necessary for the Bujagali project since it is being considered for carbon credits by the Dutch government and possibly by the European Investment Bank (EIB).

The 250-megawatt Bujagali dam is located on the Nile River and would be built and operated by the U.S.-based company Sithe Global Power, LLC and Industrial Promotion Services in Kenya, which is part of the Aga Khan Fund for Economic Development.

At 30 metres high, Bujagali is said to be the largest private power project in sub-Saharan Africa. The government of Uganda expects to complete the dam’s construction by 2010 and to see it produce much-needed power for its economy.

But the IRN report, written with the Ugandan National Association of Professional Environmentalists, questions those assumptions.

It highlights ongoing concerns about unsustainable water releases from existing dams to suggest that Bujagali’s economic benefits, as well as the long-term health of Lake Victoria, Africa’s largest freshwater lake, are both in doubt.

The operation of the two hydropower dams, the Nalubaale and Kiira dams, has been shown to be partly responsible for the drop in the Lake Victoria’s water levels, which are at their lowest in more than 50 years, the report says. This is compounded by concerns that climate change could further dry up the lake.

“So now that Uganda is so dependent on hydropower for its entire economy to add to that risk without proving beyond the shadow of a doubt that Bujagali will be viable even at very low water levels… is just unfair to Ugandans and their economy,” said Lori Pottinger of IRN. “It’s unfair for them to continue that course – that risky, risky course.”

Pottinger, who has followed the project for years, argues that the economic feasibility depends on a certain level of hydrological flow through the two existing dams upstream, yet “no document that the [World] Bank has released reveals whether or not Bujagali will be viable in a drought condition or with the lake being permanently lowered as it is now.”

The report also says that no study has yet been done to analyse the effects of climate change on the area, which is expected to further reduce outflows in the Nile basin.

“Without a publicly available independent analysis of the climate change risks on Bujagali and the greater Ugandan economy, it is impossible to evaluate the project’s economic viability, and to compare it to alternatives that would not be impacted by a changing climate,” says the report, which was written by Daniel Kull, a Kenya-based hydrologic engineer.

The Ugandan government argues that drought, and not the dams, was mostly responsible for the shrinking of Lake Victoria.

The IRN report also says other measures, like greater use of alternative energy sources such as municipal solid waste and wind power, together with improved energy efficiency and a plan to address transmission losses, could in fact furnish as much as 380 megawatts of the nation’s energy, at little cost compared to Bujagali.

“It is clear that the various alternatives have not been assessed in either a comprehensive or balanced way as part of the evaluation leading up to Bujagali,” says the report.

Contrary to the recommendations of the WCD for transparency in project planning, a number of documents related to the dam remain under wraps or have not yet been released, such as the Power Purchase Agreement, which sets the terms between Uganda and the operating companies, and hydrological data monitoring Lake Victoria’s daily water level.

At a public meeting last October in Kampala about Lake Victoria’s falling water levels, the Ugandan Ministry of Energy disputed that the dams were a primary cause of the problem, and promised to release data to prove it.

Environmentalists are still waiting for that promise to be fulfilled.

The Bujagali dam came close to being built in 2002, but was put on hold after the U.S. Justice Department and the World Bank’s Fraud and Corruption Unit launched investigations into the project. The original sponsor, the U.S.-based AES, pulled out at that time. Now, international public lenders are again considering backing Bujagali.

The International Finance Corporation, the World Bank arm that lends to the private sector, said in December that its board will decide on the proposed 100-million-dollar investment in Bujagali on Apr. 19.

The European Investment Bank, the other public investor, says that its 130-million dollar loan may be approved in March.