USA: Environmentalists Question Uganda Dam Project

WASHINGTON -- World Bank funding should not go toward building a large hydroelectric dam in Uganda when smaller scale renewable energy, like wind and solar, would more likely benefit the East African nation's rural poor, according to environmental groups here.

The International Finance Corporation (IFC), the private lending arm of the World Bank, and the International Development Association (IDA) of the institution, are considering whether they will provide financial support to the US company that will build the 250 megawatt Bujagali dam.

The 22-metre-high dam, to be located on the Nile River, will be constructed and operated by AES Corporation, one of the world's largest power companies.

As environmentalists publicise their campaign against the dam, the Virginia-based corporation argues that hydropower is the only way to meet what it says is a 44 percent energy deficit in Uganda, one of the world's poorest nations.

Given the go-ahead by the Ugandan government, this 500 million dollar project -- one of the largest single investment in East Africa -- is also being considered by the US Overseas Private Investment Corporation (OPIC), and other publicly financed export credit lending and investment guarantee agencies.

Environmental groups, including Friends of the Earth (FOE) and the International Rivers Network (IRN), argue that the majority of Uganda's rural poor will not benefit from the dam since about 95 percent of the population in Uganda are not hooked up to the energy grid.

Despite some recent efforts by the World Bank to expand the energy grid in Uganda, Lori Pottinger, Africa campaigns director at the California-based IRN, says this project goes against the institution's mission to alleviate poverty.

''This project reveals how the IFC's process for evaluating such projects is often skewed toward predetermined outcomes that favour corporations over the poor,'' says Pottinger.

She says the Bank is falsely relying on a premise that economic growth spurred by the project will trickle down to the poor. Pottinger argues that the institution is not taking into account how corruption and social inequalities will inhibit the poor from benefiting from the dam.

Alternative energy -- such as wind, geothermal, and solar power -- could be the key to meeting Uganda's needs, say environmentalists here. These smaller-scale projects could provide affordable energy to rural populations who are not connected to the energy grid, they argue.

Groups say the dam will benefit urban areas -- primarily industry in Uganda and Kenya.

''We want to take a close look at the best ways to meet Uganda's energy needs,'' says Andrea Durbin, with FOE's international finance programme. ''Renewable energy has to be on the table.''

It is unclear how much the energy from the Bujagali project will be needed in Uganda, says Durbin, since the latest dam built in the country -- the Owens Falls Extension Project -- is not yet fully operational.

When the company meets here on Jun. 27 with interested non-governmental organisations (NGOs), Durbin says she will ask to see a copy of the power purchasing contract between AES and the government of Uganda.

US NGOs, especially IRN, have been critical of public financing going toward large dam projects, since they often damage river ecosystems and relocate thousands -- sometimes tens of thousands -- of poor people in rural areas.

In developing countries, reservoirs caused by dams also increase serious water-borne diseases like malaria and schistosomiasis since stagnant pools of water are breeding grounds for malaria-carrying mosquitoes and snails which spread schistosomiasis.

According to Christian Wright, a manager for AES working on the project, the Bujagali dam would relocate 44 households or 387 people, much less than many other large dams.

Yet environmental groups which have been tracking World Bank-funded large dams for decades note that those displaced -- especially in Africa -- are left permanently poorer as a result of the project.

Some local Ugandan-based environmental organisations, including the National Association of Professional Environmentalists, are concerned about losing the Bujagali Falls, cascading rapids that will be drowned by the reservoir.

According to IRN's Pottinger, recent figures show that more than 6,000 people raft the Nile each year near Bujagali Falls, spending nearly four million dollars a year in Uganda.

She also warns that changes to the river could also permanently harm fisheries.

''The area around Bujagali Falls supports a substantial number of subsistence and commercial fishermen, who depend on the resource for both food and income,'' she says.

The company is currently having its Environmental Impact Assessment of the project revised and will release its findings in mid-July.

Wright with AES, says the company will then meet six weeks later with NGOs to further discuss the report. He argues that the proposed dam would be located in a site that would pose the least environmental damage and provide energy at the least cost.

Because the project site is in a gorge, the inundation stays within the river banks, unlike other large dam projects which flood much larger areas, he says. He contends that the amount AES would provide the government in taxes -- 18 to 20 million dollars per year, according to Wright -- far outweighs any revenue generated by tourism related to the Falls.

He says lack of energy is crippling the land-locked country.

''The country loses two percent of its GDP per year because of power cuts and the average firm in Uganda loses 90 work days a year because of insufficient power,'' says Wright, quoting World Bank and Ugandan Ministry of Finance figures.

A poll taken in October 1999 by New Vision, a Ugandan national newspaper, found that 85 percent of the populace supported the project, according to Wright. He says local NGOs and affected communities have been consulted.

Wright points to an opinion poll taken this past April by Steadman Research Services, a Nairobi-based firm, which found that 96 percent of Ugandan NGOs polled expressed support for the project.

''Certainly there is opposition to the project, but we have felt that this is a project the Ugandan people want,'' says Wright.

Pottinger says the poll figures seem unbelievable to the NGOs that IRN works with in Uganda. ''We question the use of a single opinion poll in determining Uganda's future energy course, especially because it appears there has not been an open, informed debate about energy options in Uganda, '' she wrote in a letter this week to Wright.

The IFC board of directors is expected to vote on the project early next year.

• 194 World Financial Institutions