Stop US–based AES Electric, Ltd. from Damming Uganda's Bujagali Falls

Monday, March 20, 2000

"Future economic prosperity and sustainable water resource management in Uganda will not lie in huge dams. The way forward is the wise use of river–based environmental goods and services; not their extinction through the pursuit of hydropower lunacy." – National Association of Professional Environmentalists (Uganda).

Uganda is one of the world's poorest countries, with a per capita GNP of just US$190 and a position of 163 out of 191 countries in UNDP's Human Development Index. Approximately 95% of the population does not have access to electricity, and most could not afford it even if they were connected to the national grid.

The U.S.–based AES corporation, the largest independent power producer in the world, proposes to construct a US$520–million dam near Bujagali Falls on the Nile. The dam would create a socially and environmentally destructive reservoir, would worsen downstream impacts as it would be the third dam in the upper Nile, and would drown the spectacular Bujagali Falls.

After being rejected by Parliament on numerous occasions, the Ugandan government finally approved the project last fall, and now international money lenders are reviewing it for possible investment. In January, the International Finance Corporation (IFC), the private–sector investment arm of the World Bank, began evaluating whether or not, and under what conditions, it will financially support the project. This appraisal is expected to begin in April and last about six months, at which time the IFC could begin to negotiate terms of a loan for the project with the Ugandan government.

Local environmentalists believe the dam will harm Uganda's chances to pursue true renewables like solar and wind, and point out that this project will do nothing to help the majority of Uganda's poor majority. Not only is this large dam a bad match for the country's needs, but it will have serious social and environmental impacts as well. Concerned citizens should send letters to AES and the IFC calling on them to propose more appropriate energy options for Uganda––ones that protect its natural resources while also helping the poor majority of its citizens. While it will likely take up to 6 months for the IFC to decide whether or not to fund the project, letters now will have the effect of making them take notice of local NGOs' concerns.


The dam would be built 10 miles below two other large dams, the existing Owens Falls Dam and the Owens Falls Extension Project, now under construction. The Bujagali Falls project would flood the Nile all the way to the base of the Owens Falls Dam.

According to AES's own environmental impact assessment, the dam would permanently displace 820 people, and affect an additional 6,000 by submerging communal lands, burial sites or portions of their land. Replacement land for those who would lose homes or crops is practically non–existent in the area. The record of large dams worldwide reveals that those displaced will be left permanently poorer as a result of the project.

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. Malaria is already the leading cause of death in Uganda.

The creation of a reservoir could also permanently harm fisheries. The area around Bujagali Falls supports a substantial number of subsistence and commercial fisherman, who depend on the resource for both food and income.

The project will permanently submerge highly productive agricultural land on the river's banks as well as islands of extreme biodiversity. Displaced peoples will increase the stress on land near the reservoir, resulting in further watershed degradation and deforestation and a loss in soil productivity.

The project will also drown Bujagali Falls, a spectacular series of cascading rapids which Ugandans consider a national treasure. With the true "Source of the Nile" submerged by the upstream Owens Falls Dam in 1954, Bujagali has become a popular site for Ugandans as well as foreign tourists. AES's project environmental assessment dismisses the falls as "attractive but not exceptional." Tourism around Bujagali Falls has offers great potential to Uganda's burgeoning tourism industry. Recent figures show that over 6,000 people raft the Nile each year near Bujagali, and it is estimated that these tourists spend nearly $4 million a year in Uganda on ancillary activities not related to rafting. The dam will snuff out this income, much of which goes directly to local communities.


Two groups in particular are leading the charge in Uganda against this project: a grassroots group called Save Bujagali Crusaders, and the National Association of Professional Environmentalists (NAPE).

The NGOs say the project will cause the Basoga people, who live near the falls, to suffer "cultural death." They also note that this project and other dams proposed for the Nile in Uganda could heighten water conflicts in the Nile Basin.

AES's Uganda representative, 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.

AES may be dismissive of local activists' claims against the project, but it will be hard pressed to show how their dam project will help solve what some see as Uganda's biggest environmental problem: grinding poverty. Bujagali Crusader Martin Musumba says, "The real issue in Uganda is not electricity but poverty. Currently the majority of Ugandans have no money for electricity, for they are below the poverty line. Production of more electricity will not reduce use of fuelwood and charcoal until deliberate programs are evolved to reduce poverty and the cost of power." Musumba, NAPE and others are pressing for a sustainable fuelwood program as well as a solar PV program, which could be modeled on Kenya's experiences, which have been highly successful.

In Uganda, the potential for alternatives to large hydro is excellent, but has generally been overlooked by major funders. In addition to improving efficiencies and wastage in the existing system (estimated to have losses of power of up to 40%), Uganda is favorably endowed for both solar and wind power.

Solar's biggest advantage is that it does not require connection to the national grid, which is a huge expense if electricity is to be made available to the rural population. Emphasizing solar instead of hydro would also open up good opportunities to collaborate with neighboring Kenya, whose highly regarded private–sector system of photovoltaic solar systems have caught the eye of the world. In Kenya, more households get their electricity from the sun than from the national grid, according to The Economist. Some 50 local companies now manufacture or assemble PV systems in Kenya. Unlike the region's big hydro projects, Kenya's solar industry has developed without significant aid, subsidies or government support, according to renewable energy experts working in the region.

Activists working to stop Bujagali envision a national energy plan that takes into account the needs of the poor and emphasizes true renewables like solar, wind, micro–hydro. In addition, NAPE activists say, "Fuelwood energy development must also be an integral aspect of any energy plan for Uganda if it is to be socially relevant to the poor."

They believe a commitment to big hydropower now may preclude Uganda from pursuing such a path, and are convinced it will come at the expense of the rural poor, as have all of Africa's large dams.

"Future economic prosperity and sustainable water resource management in Uganda will not lie in super or huge dams," the activists write in a submission on the Bujagali project to the World Commission on Dams (now reviewing the worldwide development record of large dams). "With Bujagali saved, the country would have one of the most attractive cascades of nature–based tourist sites. The way forward is the wise use of river–based environmental goods and services; not their extinction through the pursuit of hydropower lunacy ... or forced development that leads to extinction of bio–cultural diversity."


What you can do:

Write to AES urging it to preserve Bujagali Falls, and invest in energy projects that will help the majority of Ugandans. Such projects might include demand–management and energy conservation measures, and wind and solar power. Tell them that because the cost of extending the national electricity grid to those without power (who are mostly in remote rural locations) is prohibitively expensive for Uganda, the AES claim that this project will bring power to the poor does not hold water.

Explain that the many functions of a freshwater ecosystem like the Nile –– as a source of rich fisheries, forests, natural water filters, and reservoirs for groundwater storage –– would be seriously impaired by the continued damming of the river. Destroying these riverine ecosystems by building more large dams will cause serious problems for Uganda in the long run, at great economic and environmental cost. Tell them that sustainable human development depends on healthy ecosystems. The prudent course, therefore, is to invest in less harmful energy projects.

If you own AES stock (NYSE symbol: AES) or are invested in a fund that has significant AES stock holdings, note that fact in your letter and state that as a shareholder, you are interested in seeing AES follow its stated principals of "social responsibility" and "to serve the electricity needs of the world." If they are truly interested in serving Uganda's electricity needs, they will work to find ways to help the majority of Ugandans who cannot afford power from expensive, centralized electricity projects like large dams.

CC your letter to the International Finance Corporation, which is currently deciding whether or not to fund the project, and the Overseas Private Investment Corporation (OPIC), which may also be approached for financing. Or better yet, write a separate letter to the IFC, reminding them that the World Bank's overall goal for Uganda is to reduce poverty, and that its Country Assistance Strategy prioritizes projects that will help reduce poverty. Tell them that this project does not reduce poverty directly, and in fact may shut out investment in better options like small–scale solar or micro–hydro. Remind them that the economic advantages from dams in Africa do not "trickle down," and in fact have left the rural poor poorer across the continent.



Dennis Bakke
President and CEO

Roger van Sant
Chairman of the Board

AES Corporation
1001 North 19th Street
Arlington, VA 22209
Ph: (703) 522.1315
Fx: (703) 538.4510

AES Bujagali Project Director
Bob Chestnutt
AES Nile Power
18 Parkshot
Richmond TW9 2RG United Kingdom
Telephone: (011 44) 208–334–5300
Fax (011 44) 208–334–5327

International Finance Corporation
2121 Pennsylvania Av. NW
Washington, DC 20433

IFC Bujagali project contacts:

Glen D. Armstrong
Head, Environment and Social Review Unit

Ronald B. Anderson
Principal Environmental Specialist

Kirk Robertson
Executive Vice President
Overseas Private Investment Corporation
1100 New York Avenue, N. W.
Washington, D.C. 25027