Would You Like a Dam With That Dam?

Lori Pottinger
Friday, September 19, 2003

Bujagali Project Torpedoes Options Assessment for Uganda

Local and international groups have been lobbying for a full and fair review of the various energy options available to Uganda ever since the Bujagali Dam site was first granted to the US–based AES Corporation in the mid–1990s. However, extensive efforts by NGOs to promote further analysis of energy alternatives have for years fallen on deaf ears at the World Bank Group, the project’s main backer. In fact, the Bank has actually subverted efforts to analyze non–hydropower options: it manipulated data to justify Bujagali as the "least–cost" option for Uganda after its consultants pointed to other projects as cheaper; hired a dam–building firm to produce an "energy alternatives" report that analyzed only hydropower projects, and has consistently dismissed (without justification) the promising option of geothermal power.

Bujagali was still in the planning process when the WCD final report was released. In August 2003, AES quit the project for financial reasons, but the Government of Uganda and the World Bank have expressed interest in going ahead with the project despite this major setback, and have set out to find another partner to replace AES. All indications are that the Bank will again ignore calls for a comprehensive options assessment. 

The following details the one–option path taken by the developers of Bujagali Dam, and the quest by NGOs for a better process for determining Uganda’s energy–development path.

Project Background

Bujagali Dam is a 200–megawatt hydropower project proposed for the Nile River at Bujagali Falls, near Lake Victoria. The concession to build the dam – the largest private development project in East Africa – was granted to AES without competitive bidding, and without a comprehensive analysis of Uganda’s energy needs or options. After the African Development Bank funded a Hydropower Development Master Plan for Uganda, the World Bank Group expressed interest in funding "the next hydropower project," before any other options were even assessed (1).

The Bank did undertake an assessment of energy alternatives, but it was an seriously flawed process that shed little light on Uganda’s actual energy options. The Bank’s private investment arm, the IFC, commissioned Acres International to carry out this so–called option assessment – a company which had proposed building a dam at Bujagali a few years before, and had previously worked on other dam projects in Uganda. Remarkably, the May 2000 report concluded that it would be most economic for Uganda to develop a gas–fired combined–cycle plant first, followed by Bujagali – advice the Bank chose to ignore. Equally remarkably, the 377–page Acres report devotes only one paragraph to geothermal energy, despite the fact that previous World Bank research revealed that Uganda has at least 450 megawatts of potential geothermal capacity. Acres also recognized, but did not analyze the potential of bagasse–fired power plants or demand side management in Uganda (2).

In December 2001, the World Bank Group approved approximately $215 million in support for the dam, hoping to make the project a showcase for private investment in Africa.

Uganda clearly needs power, but questions remain as to whether a large dam – and particularly a dam at the Bujagali site – is the most appropriate approach for the poor, indebted nation. Although 95% of the Ugandan population does not have access to electricity, most could not afford Bujagali’s costly power even if they were offered free connections to the national grid. An analysis of the project’s Power Purchase Agreement prepared by the independent Prayas Energy Group revealed that Uganda will be faced with an average $20 million in excessive payments each year if the dam moves forward under this contract (3).

The Quest for Alternatives to the Dam

Beginning in the late 1990s, Ugandan and international NGOs were calling for a more realistic look at Uganda’s energy needs, and the best way to meet the needs for the majority of its people. The concern that most Ugandans could not afford power from the expensive Bujagali Dam was widespread. "The major question that should be addressed by any serious investor is not access to electricity but its demand," wrote Martin Musumba of the Ugandan group Save Bujagali Crusade in the late 1990s. "Less than 15% of the Uganda population can afford electricity. The rest of the population have no choice but to continue to use fuel wood and charcoal due to the high cost of power and high level of poverty. Production of more electricity will not reduce use of fuel wood and charcoal until deliberate programs are evolved to reduce poverty and the cost of power."

The World Bank had data that agreed with Musumba’s. A 1996 report by the World Bank–managed Energy Sector Management Assistance Programme (ESMAP) stated: "No more than 7% of [Uganda’s] total population can afford unsubsidized electricity." It is unrealistic to think that more than a fraction of the rural population could be reached by a conventional, extend–the–grid approach. A more promising course is to rely, instead, on "alternative" approaches to electrification."

In addition to questions about the wisdom of adding a 200 megawatts to the grid, others were noting that Uganda’s grid was very inefficient. According to Uganda’s 1996 State of the Environment Report (by the National Environmental Protection Agency), over a quarter of the power generated in Uganda is lost to poor transmission. In 1995 transmission losses were 32.4% of power generated. NGOs have noted that before millions of dollars are spent to generate more power in Uganda, ample investment needs to be made to reduce losses in the transmission of power.

In its alternative study, Acres stated that reducing transmission and distribution losses in the Ugandan grid could save 30MW and that this would be "the most economic development for the Uganda National Network. Programs to increase efficiency among end users could cut demand growth further." Demand–side management is not included in the World Bank’s economic assessment of power options, although it would be the cheapest method of increasing electrical services in Uganda.

Geothermal Given the Cold–Shoulder

NGOs have raised geothermal energy as a serious option on numerous occasions throughout the Bujagali planning process. A report by International Rivers in 2000, which reviewed the World Bank’s economic evaluation of Bujagali, noted: "Contrary to [the World Bank’s] conclusions, geothermal and bagasse power sources together have the potential to supply all Uganda’s grid power needs over at least the next decade with similar or lower costs and less vulnerability to climate change and other risks." (4) This report states that "geothermal power could be available sooner than Bujagali, at a competitive price, at lower risk of exposure to drought and climate change, and with greater flexibility in meeting changing growth in demand for grid electricity." The Bank’s ESMAP had earlier noted "as much as 450MW of thermal potential may be available in the western Rift Valley." According to the Geothermal Energy Association (1999), Uganda is one of only eight countries with populations above 20 million which have the potential to get virtually all of their power from geothermal, implying there may be a greater reserve than 450MW. According to a report prepared in 1999 by the Uganda Geological Survey, at least two of Uganda’s geothermal fields "are located a few kilometres from the existing power grid and their exploitation would have a minimum of infrastructure requirements to develop."

And yet, the World Bank dismissed geothermal power from further analysis and comparison with Bujagali and other generating options on the grounds that its costs "are very speculative." The Bank’s economic analysis dismissed the potential of geothermal generation with the statement that it "could not be commissioned much before 2010 if decisions were made now to embark on a development program." No further explanation is given for this statement which flies in the face of other evidence. In reality, delays in Bujagali make it unlikely that it could be providing power before 2010 either, even if a new investor were to step up to the plate today.

Despite this, interest in developing Uganda’s geothermal resources has continued to grow. Ugandan NGOs in April 2003 held a workshop in Kampala on the nation’s geothermal potential. Some 80 people attended, including Ugandan government officials, geothermal experts from around the world, and Ugandan citizens. NGOs in Uganda have continued to lobby the government there to take steps to move geothermal forward.


As this paper went to press, the government of Uganda was meeting with the World Bank to discuss possible new investors in Bujagali. NGOs were not invited to the closed–door discussions, and there was no indication that the major players in the dam project would use the lull in the project to step back and evaluate the range of energy options for Uganda. On Sept. 9, the Ugandan NGO the National Association of Professional Environmentalists stated in a press release: "Now that Bujagali is without a backer, and given the concerns about the project’s economic and financial viability, there is a window of opportunity to launch a full options assessment for Uganda – one that would fairly evaluate opportunities for geothermal energy, other sites for hydropower projects, bagasse, demand–side management and other options. An open and transparent process to evaluate Uganda’s various energy options – as detailed in the recommendations of the World Commission on Dams – will clarify what is the best way forward to meet Uganda’s energy needs."

The World Bank has not only flaunted the recommendations of the WCD on Bujagali, but it appears bent on building this white–elephant of a dam despite the clear evidence that Uganda has numerous options that might better meet the country’s long–term development goals. A needs and options assessment is the best way to pinpoint the most workable, most economic, least destructive energy options. If the Bank continues to pursue pet projects like Bujagali and skips the step of doing needs and options assessments as outlined by the WCD, its projects will continue to miss their marks, harm the world’s poor, and fall short of meeting development goals.


1. Pervasive Appraisal Optimism: A Review of the World Bank’s Appraisal of the Bujagali Project, By Peter Bosshard, International Rivers Network, 14 May 2002
2. Ibid.
3. See Prayas Energy Group, The Bujagali Power Purchase Agreement – an Independent Review, November 20, 2002
4. Review of IFC’s Report "Bujagali Project: Summary of Economic Due Diligence" by International Rivers, November 19, 2001