World Bank’s Unflagging Favoritism for Overpriced Bujagali Project Has Helped Put the Brakes on Uganda’s Energy Development.
Today, the US–based energy giant
AES Corp. filed a quarterly report with the US Securities and Exchange
Commission announcing their decision to "discontinue the construction and
development of AES Nile Power in Uganda (Bujagali)."
The proposed $530 million dam on the Nile River has been marred by
controversy since the troubled Virginia–based AES was first awarded the
right to develop the Bujagali Falls site in the 1990s. The controversy was
fueled not only the lack of competitive bidding, but by the refusal to
disclose the terms of the contract between the company and the goverment.
The project also met with stiff opposition from local organizations
concerned that the dam would drown the culturally important Bujagali
Falls, and who urged the government to preserve the falls and look to
less–harmful and cheaper energy alternatives.
But the World Bank saw the dam as a key element in its effort to privatize
the Ugandan energy sector, and for five years championed the dam above all
other options. In 2001 the Bank approved approximately $215 million in
support for the project. Construction was put on hold when corruption was
discovered last year.
Lori Pottinger of International Rivers says:
"AES maintained that Bujagali Dam
would help pull Uganda out of poverty, but in reality it was a costly
white elephant that would have increased the nation’s debt load, and
produced electricity that most Ugandans could not afford. The bloated
project has stifled the development of viable renewable energy options
such as geothermal."
An independent analysis of the
project’s contract, completed in late November 2002, revealed that
Ugandans would have paid hundreds of millions of dollars in excessive
power payments if the World Bank–financed Bujagali Dam were built
according to plan.
Peter Bosshard of International Rivers says:
"AES has lost $75 million in the
Bujagali adventure. We hope this sends a message to other power companies,
such as South Africa’s Eskom, which might consider investing in the
project."
Bujagali and Nam Theun 2 Dam in
Laos were the crown jewels in the Bank’s much criticized global strategy
of promoting private sector investment in massive dams in the global
South. Like Bujagali, Nam Theun 2 is now foundering after the main
developer, France’s ED, pulled out in July.
Says International Rivers’s Lori Pottinger,
"The World Bank has said it will
step up its funding of what it terms ’high risk/high reward hydraulic
infrastructure.’ Bujagali shows yet again that the risks of these
projects are huge and the rewards often non–existent for the governments
who tie their fortunes to them. The World Bank should learn from these
failures and encourage less socially, economically and environmentally
destructive forms of development in the world’s poorest nations."
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