World Bank, EIB Approve Bujagali Dam Despite Major Flaws

by Lori Pottinger
Saturday, December 15, 2007

Who could be against a project that provides energy to Uganda – a country with one of the lowest rates of electrification in the world and one of the highest poverty rates? A country where blackouts are part of the fabric of life?

Quite a few of us, it turns out, and for a variety of reasons. The Bujagali Dam project, now under construction just below Lake Victoria on the Nile, is not such an obviously bad project – no slave labor building the dam or millions of people displaced. In other words, no deal-breaker for the world's reputation-conscious development banks.

Today, the Ugandan economy is in crisis due to over-dependence on hydropower from the Nile and minimal efforts to develop other energy sources available to it, such as the region's abundant geothermal reserves, energy efficiency measures, solar power, micro-hydro, co-generation, and other options.

In the years that activists in Uganda and worldwide worked to save the Victoria Nile from yet another large dam and promote better alternatives to it, the Bujagali project's flaws began to add up. By the time the World Bank and EIB approved the project in April, the US$800 million dam was revealed to be flawed on economic grounds, in protections for endangered fisheries, and in its potential to harm Lake Victoria.

More to the point for Uganda's citizens, the hugely expensive dam will not bring power to those in need: its electricity will be too expensive, and connections to the national grid for rural villages too dear. An independent economist who reviewed the World Bank’s findings states, "The project is expected to have little or no positive impact on the majority of Ugandans now without electricity, and, at best, only a moderate benefit to the overall Ugandan economy."

Frank Muramuzi of Uganda's National Association of Professional Environmentalists (NAPE) says: "The high cost of the project will further limit funds available for rural electrification, and will likely lead to reductions in tariff subsidies for grid-connected users. Uganda already has the most expensive power in the region and tariffs have more than doubled in recent months, thus pushing more people out of the already limited market for electricity." NAPE has been lobbying for development of the nation's geothermal resources, and for better energy development programs for the rural poor. The group also believes another large hydropower project, Karuma, will be less harmful than Bujagali.

Ignoring inconvenient truths

Perhaps most remarkable is how the various parties downplay the project's hydrological risks. The World Bank's least-cost analysis ignored extensive evidence that climate change will reduce outflows in the Nile, and proposes a new hydrological flow pattern for operating the dam complex that could slow the recovery of Lake Victoria.

Independent hydrologist Daniel Kull, whose 2006 study documented how the two existing dams were responsible for more than half the recent drops in Lake Victoria, says the project's hydrology analysis "starts by ignoring the true damage done to Lake Victoria by the existing dams and follows with a selective and optimistic view of current lake levels and possible climate change impacts. It is disturbing that the banks would approve a major infrastructure project based on biased hydrologic analyses." The result could be a repeat performance of the Kiira Dam debacle, in which the Bank used over-optimistic hydrological projections to justify that dam’s projected capacity – projections which led to over-releases of water from the dam and the dropping levels of Lake Victoria.

It is particularly amazing that the IFIs would accept the argument that climate change will not significantly affect the Nile River flows. Climate change experts familiar with the science on the Nile say that hotter temperatures are expected to lead to a reduction in the Lake's outflow. Lower flows would wreak havoc on Uganda, as it relies on the Nile for virtually all of its electricity (a situation that will be exacerbated by the building of Bujagali). It is hard to imagine any Northern country accepting a project that would make it almost 100% dependent upon one type of electricity, and one that is uniquely vulnerable to climate change.

The IFIs are proceeding without any guarantee that the operators of Bujagali will be any more careful to protect the Lake's level than the previous dam operators have been. NAPE's Muramuzi says, "The dam's developers say they cannot control the outflow of water from upstream dams, so there is no guarantee that the current pattern of unsustainable releases will be stopped."

The project EIA was also flawed in analyzing the dam's impacts on fisheries. Les Kaufman, a US fisheries expert with long experience studying the Nile, has concluded that the existing studies are "inadequate to rule out a likelihood of negative impacts to the survival of endangered species caused by dam construction… The potential impacts to species diversity and ecosystem services from the proposed dam are extremely high." He recommends additional comprehensive baseline studies, a sustainability plan for the Victoria Nile, and improved mitigation measures. It appears his concerns were ignored by the IFIs.

Inspection Panels will analyze

In March, NAPE and others filed a complaint with the World Bank Inspection Panel, citing concerns about potential violations of Bank policies on Bujagali, and shortly thereafter, with the African Development Bank's compliance unit. Both panels have agreed to inspections, and did research visits to Uganda in November. Their reports are expected in early 2008. The World Bank's panel stated in its preliminary report that it will look at questions about resettlement, the project's impacts on electricity tariffs, the cumulative environmental impacts from multiple dams on the Nile, and hydrological implications in light of a changing climate, among other issues.

Groups have also documented the project's non-compliance with the best-practice standards described by the World Commission on Dams. In 2005, the EIB told International Rivers that it will "align to" the recommendations of the World Commission on Dams (WCD) for any large dams from which it sources carbon credits. Yet Bujagali fails to meet WCD standards in many key areas, including comprehensive options assessments, addressing the impacts of the two existing dams, analyzing cumulative impacts, and others.

For example, on the issue of options assessments: Uganda’s energy crisis is real, but it has been amplified by its over-dependence on hydropower from the Nile and minimal efforts to develop other the hundreds of megawatts of cleaner energy sources (including plugging leaks in the system: the national grid is estimated to leak a third of the electricity that flows into it) that could have been prioritized before Bujagali. The country has developed none of its geothermal energy, only a few megawatts of an estimated 40MW potential for getting energy from sugar cane waste, and a small portion of its small- and micro-hydro potential.

Sadly, the Bujagali Dam story seems to be the story of Africa's energy-development past, present and future. There is no "Apollo Program" to light Africa's villages, but there are dozens of plans to build megadams that will power huge mines, smelters and factories. While the IFIs hope for a trickle-down benefit from their grand schemes, Uganda's rural poor will remain in the dark even after Bujagali comes online.


  • Project Cost: US$799 (not including transmission lines)
  • Electricity: Promoters say 250 MW, but during low flows, could be much less
  • Timeline: Construction underway, expected to be complete by 2011-12
  • Money matters: World Bank Group (US$360mn in loans and guarantees), EIB Euro 100 million, African Development Bank ($110mn)
  • Affected People: About 5,000 people will be directly affected by project construction