Review of "Assessment of Generation Alternatives – Uganda" by Acres International
ASSESSMENT OF A RANGE OF AVAILABLE ALTERNATIVES
The assessment’s goal of looking at projects that are "appropriate for development of the Uganda National Network" may be too limiting. Perhaps a more appropriate goal, given that the Ugandan grid is highly inefficient and only covers 5% of the population, would have been to look at projects that would bring energy services to more Ugandans. This would have opened the assessment to analyzing all of Uganda’s options, rather than just hydropower on the Victoria Nile.
The assessment team "reviewed available reports," but does not appear to evaluate the overall picture for missing data (such as a full study of the potential for solar or wind, or analysis of demand, potential for DSM, etc.) In fact, this methodology has an inherent bias toward hydro, which the assessment notes "has been considered since the 1940s ... Since that time, numerous studies have been carried out on the extension of Owens Falls and development of other sites further downstream on the Victoria Nile" (p. 2–1). As both solar and wind are newer technologies, the data for East Africa is understandably slim. A fair assessment of these alternatives would have recommended further study of their potential, or would have undertaken the necessary research.
The choice of consultant, the hydropower firm Acres, International, seems to have biased the outcome of the assessment to favor hydropower. Acres is not an independent party in this evaluation, having been involved in the nation’s hydropower development for years (including doing a "pre–investment study" on Bujagali, and working on the Owens Falls extension). This is not to say their work is without merit, only that the company is unable to be as independent as a non–hydro company. The IFC should commission a study of alternatives other than hydropower, and an analysis of decentralized energy–generation systems that do not require connection to the UEB grid. This assessment should not be associated with a company that specializes in hydro.
The objectives of the assessment team include "assessing technical, economic and environmental issues of the competing projects on a comparable basis." Yet wind and solar have not been accorded the same extensive analysis as hydro. The analysis on solar, for example, is restricted to approximately 10 paragraphs out of 343 pages (not including figures, table of contents, references, etc). No specific projects are evaluated in the same way that hydro is, and hydro is not compared to other options in any significant way.
The assessment states that Uganda needs more power immediately. It will take at least 4 years after approval for power generation to begin on Bujagali Dam, which is farthest along in the approval process; and the project could be delayed, perhaps significantly according to the Acres report, by difficulties in resolving compensation issues (see p. B–15). What are the impacts of this delay on the Ugandan economy? How do other options with quicker startup times compare to hydro, if such impacts are considered in their economic analysis?
The bias toward hydro is so strong in this assessment that the authors repeatedly refer to "analysis of generation alternatives" which includes only hydro projects (see for example section 4.1, "a preliminary list of environmental impacts... was able to be defined for the main hydroelectric projects under consideration"). Stakeholder meetings also did not adequately review renewable alternatives (see below).
Finally, there is very little analysis of efficiency measures. There is apparently no cost comparison to hydro or other alternatives. It is not clear why DSM is not treated as an energy alternative and given the same treatment as supply–side options. While the assessment states that such measures will be handled by the private sector, all the hydro projects under consideration are also private–sector projects and yet were extensively analyzed. We would also like to see the full analysis that is behind the statement that "DSM could reduce demand by 30 MW," since it seems low even if it only includes losses in the transmission and distribution system. It does not seem to include energy gains through efficiency measures, which would be part of a DSM program.
The input of informed stakeholders appears to be based on inadequate data, since none of the projects evaluated have been subject to an environmental review process. The assessment states that only Bujagali has been studied for environmental impacts, but that this study was deemed inadequate by the IFC. As the assessment’s authors state regarding Bujagali’s EIA, "It is not clear whether sufficient quality or quantity of baseline data has been collected to support the findings" and that "predicted effects are based on little data or data from previous studies" (from Appendix B, B–8). How were stakeholders able to evaluate the significance of projects’ impacts if these impacts are unknown or, in the case of Bujagali, based on insufficient data?
It appears that in evaluating hydro alternatives, stakeholders were only asked to rate individual projects. It appears they were not asked to evaluate the government’s overall plan to build 3–6 dams for its impacts on the river’s health, and on downstream communities and neighboring states. The assessment recommends that the government should begin a study of cumulative impacts before approval of any individual dam project. An environmental flow requirements study (EFR) should be completed before the approval of any project, because it could influence which of the various options is chosen. If, for example, the EFR reveals that only one dam is feasible when taking into consideration the impacts on ecosystems and downstream communities, then Uganda may choose to build the project that brings the most power with the fewest impacts. Waiting to do an EFR until after development of the river has begun can only lead to poorly informed choices, as is occurring now in Lesotho, where decision makers are faced with scaling back the giant LHWP project after years of economic planning based on the development of five dams. (Note: Acres International is a contractor on the LHWP, and is one of more than a dozen major dam–building firms now on trial in Lesotho for allegedly giving bribes to the CEO of the project.)
It appears that, like the Acres assessment itself, stakeholder meetings did not evaluate solar, wind and other low–impact renewable energy sources. See for example 4.2.4, "participants were asked to make assessments of the importance of their environmental concerns by hydroelectric power project alternatives..."; and 5.4.2.4, "...other forms of power (wind, solar) were considered, but not much discussion on these alternatives".
According to the assessment, Uganda’s plans for its energy sector include the following goals:
- Make power sector financially viable and able to perform without government subsidies;
- Increase power sector’s efficiency
- Improve the reliability and quality of electricity supply
- Accelerate rural electrification.
It is not clear whether the hydropower projects were actually evaluated by Acres for meeting these goals. For example, it does not appear that stakeholders or even the Acres study team had sufficient information about possible subsidies to projects as negotiated through project Power Purchase Agreements (PPAs), since the Bujagali PPA is not publicly available (and none of the other projects has a PPA).
The real possibility that the region will be faced by severe drought in coming decades could make hydro unreliable. Will individual projects be evaluated for reliability under a scenario of increasing risk of drought due to climate change and natural climate variability?
Finally, it appears the team did not evaluate an array of possible alternatives that would accelerate rural electrification, nor did it evaluate how choosing an energy development plan based almost entirely on large hydro would impact plans for rural electrification.
Preservation of the Falls:
The section on an alternative design for the dam, which would preserve Bujagali Falls, says this design was rejected because it would cost more and produce less power. Acres recommends that AES give a more comprehensive comparison of capital costs and unit cost of energy so "stakeholders have a better appreciation of the cost of saving the falls." It would make more sense to evaluate a dam at Bujagali that does not harm the falls with other options that do not harm the falls (either other hydro projects or other energy options). That would be comparing "apples to apples," rather than merely trying to show stakeholders that the cost of saving the falls is too great in light of energy demand.
Hydrology:
There is disagreement among hydrologists on whether Lake Victoria’s level is rising or falling over time. The assessment states, "The hydrology of the Nile since 1954 is highly variable and has not, with absolute assurance, revealed a long–term trend for assured planning for the Uganda Power System ... The contentiousness of the subject cannot be resolved, yet the planning must proceed." It is extremely worrying that the consultants seem to be downplaying the hydrological risks. The amount of water available for this dam is critical information. The development of Bujagali will also likely open up the river to more dams, and as such an accurate picture of the river’s hydrology should be a very high priority, undertaken before development plans are set in stone.
The developers should explain why they have used the shorter flow record of 1925–present when data is available to 1894. As Acres notes, this choice of data "ignores the most critical dry period of 1907–10, and the second driest period of 1921–22." The project is also evaluated based on an even shorter (wetter) period, that of 1961–97, a scenario which increases the "firm energy" output from 912 GWh/yr to 1868 GWh/yr. This reliance on a hand–chosen set of data is very troubling. The project should be evaluated using as complete a record as possible, as other projects were (see for example Karuma).
There is also growing research to reveal that East Africa could be increasingly troubled by drought due to climate change. There is now consensus that global warming will have increasing impacts on the reliability and safety of hydro projects in coming decades. In addition, international agreement requires that "natural flows" be released from Lake Victoria at Owens Falls, according to the assessment. These issues make it imperative that AES clarify exactly how the project’s hydrological risks are allocated. Does the PPA make the Ugandan government liable if the project fails to perform (as is the case with PPAs for other private–sector dams around the world)?
In addition, Section 6.4.6 states that water uses by other states bordering Lake Victoria, the source of water for hydro projects on the Nile, "have not been considered in past hydrological studies. For this study it is assumed that the upstream water uses will not significantly affect flow in the Victoria Nile... However, any future hydropower studies on the Nile should address the subject of riparian uses." This is illogical. The life of any hydro project can be expected to be decades long, and thus will be impacted by future water–use trends. Combined with the region’s serious drought and rapidly growing population, it is unreasonable to leave this study until after Bujagali has been built.
Compensation and Resettlement
The assessment makes numerous references to disputes over compensation issues with local people, which are troubling in their implications for dam–affected people.
On fisheries, it notes, "The baseline survey indicates that 53% of households fish in the Nile River. Much of the fish is sold commercially. The developer believes these...[income figures] are exaggerated in anticipation of compensation." It goes on to say there is no baseline data on fish landings, so there would seem to be little reason for distrust at this stage. In fact, the distrust is perhaps better justified in the other direction, from affected people toward the project developer, as it appears the developer is casual with the facts in its existing EIA. Acres notes, "The EIA assessment is that ’there are likely to be improved opportunities for fishing once the ... reservoir is created.’ It is not clear whether fish stocks in the reservoir will increase or decrease after implementation of the project ... There is no compensation plan for fishermen ... it appears a compensation plan will be difficult to develop." It would take several years to do proper fisheries studies. It is clear that too little is known about fisheries to proceed.
It is a common claim among dam builders that a dam will improve fisheries, but there is rarely truth to it, and there is no reason for Bujagali’s developers to make this claim. One example of a run–of–river dam that was expected to improve fisheries but had the opposite effect is Pak Mun Dam in Thailand. According to the draft case study on this project prepared by the World Commission on Dams (Feb. 2000), "The EIA [for the dam] expected a greater number of full–time fishermen on completion of the dam [and increased catches] ... The latest survey after dam construction recorded an apparent loss of 169 fish species." The WCD report noted that there has been a 24% reduction in families who fish for part of their income in the Pak Mun area.
The assessment also stated that local council representatives "checked the accuracy and validity of responses" to a baseline survey on land valuations, but imply they are not to be trusted, because these representatives are from "the same community and may also share the same interests and expectations with respect to land valuation and compensation process as the interviewees." We note the same problem with the IFC’s choice of the hydropower firm Acres, with its history of involvement in hydro development in the region, for evaluating plans for more hydro on the Nile.
Because there have been conflicting views of what infrastructure will be provided the local community, there should be an accounting of what AES intends to provide, as there is for Karuma (p. C–8). These measures must be budgeted for.
Since relocation of people to be resettled to comparable lands is the preferred alternative (see D.2.1), a description of AES’s plans for acquiring new lands of equal quality to those to be submerged would be helpful. Land should be acquired before construction begins.
It is unclear whether the project’s costs take into account the increased cost of compensation, should local stakeholders’ valuations be used. The worldwide record on dams reveals that cost of resettlement is usually underestimated, and proposed benefits overstated.
Health:
The assessment states that "there are concerns for schistosomiasis and malaria," and recommends mitigation measures to offset these impacts. This information seems to contradict statements by the IFC, which wrote in an April 25, 2000 letter: "According to health specialists, the project will not cause a noticeable increase in vector borne diseases such as malaria and schistosomiasis.") It is not clear why the authors state that the project will not increase malaria in local populations, since the project developers have not undertaken testing of the local population. These points could use clarification.
Waiting until construction to deal with archeological finds is an inadequate response to the lack of an archeological plan. It seems unlikely that project developers will delay work sufficiently to allow for the study and removal of artifacts should they be found during construction.
Miscellaneous Comments:
There is no discussion of sedimentation for Bujagali, as there was for Karuma.
The assessment states, "The possibility of development at Bujagali Falls has already led to the destruction of natural vegetation and wildlife habitat in the area. Urbanization of the Bujagali area over the next 10 years will further impact wildlife and habitat." Why then is Bujagali rated as having only "minor" impacts on wildlife?
The section on security risk of having all of Uganda’s power supply in a concentrated stretch of the Nile is described in the assessment as "probably minimal," and that a security force can be deployed to protect the dams from saboteurs. It does not seem justified to call the risk "probably minimal," given unrest in recent years between Uganda and neighbors, and the history in Africa of using dams as instruments of war. Concentrating the entire country’s power supply on one stretch of river seems a very high security risk, and should be acknowledged as such.
The cost estimate is given as US$419m. This varies from IFC, which says in its Project Information Document that the project’s estimated costs are $530 million, while AES’ "NGO briefing" states it will cost $500. What accounts for the discrepancies?
There are discrepancies in some resettlement statistics as well. The Acres study states that 682 households (5700 people) will be affected by some level of land take, while the AES NGO Briefing states that only 180 households will be affected. And Acres states that a maximum 180 households (1553 people) will be required to move, while the AES NGO Briefing says just 44 households will be relocated. What accounts for the discrepancy?
In the section on IFC guidelines, it notes that the panel of experts should be "independent" environmental specialists. We question the choice of one team member, who is employed by WWF, since AES’ chairman Roger Sant is also the chair of WWF. We also believe that project opponents should be allowed to nominate qualified members to the POE, not just the IFC and AES.
In addition to hydropower being favored in the Acres evaluation over other alternatives, it appears that the Bujagali project has been favored over other dams. Despite the fact that both the Strategic EIA and the Acres report give the impression that all the dams are being compared by the public, the Acres team and policy makers, it appears that the Bujagali Dam is being favored to the point of other projects being put "on hold" until Bujagali moves forward. Section 7.2.2 notes, "There is no development taking place at the Kalagala site at present. [Project developers] AIC, who apparently have the rights to develop the site, has instead come to an arrangement with the Government and with AES and will participate in the EPC contract for Bujagali and is not promoting Kalagala at this time."
Note: Due to the limited amount of time to review this and other documents in time for the July 27 meeting, our comments are incomplete at this time. We will submit more substantial comments, including an independent analysis of the Acres assessment of renewable energy options, at a later date.
