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NGOs Tell World Bank to Reconsider Bujagali DamMay 20, 2002 In a May 2002 letter to Executive Directors, 120 NGOs urge the Bank to delay further funding approvals until a report by the Inspection Panel on the dam’s violations of Bank policy is released. They also request a "more realistic" economic assessment of the project, and a release of the project contract in Uganda.
Executive Directors Re: Bujagali Hydropower Project Dear Executive Directors, In December 2001, the World Bank’s Executive Board approved IFC and IDA funding of up to $225 million for the Bujagali Hydropower Project in Uganda. Several other financial institutions – including US OPIC, the United Kingdom’s ECGD, and Germany’s DEG – have declined involvement in the project. Sweden’s EKN has declined for the time being, and the export credit agencies of Norway and Finland have not yet taken any decisions. According to the reputed journal, "Development Today", EKN concluded that the project was "too risky". Management now hopes to extend a MIGA guarantee of $215 million to the Bujagali project. Such a guarantee would cover the project’s political risk, would pull Nordic export credit agencies back into the funders’ consortium, and would thus rescue the project. Ugandan and international NGOs have a series of concerns regarding the economic, social, environmental and cultural impacts of Bujagali. Ugandan NGOs and citizens submitted a complaint to the World Bank’s Inspection Panel in July 2001. We assume that the report on Bujagali will be completed very soon, but understand it has not yet been submitted to the Board. A new report published by International Rivers on May 14, 2002, suggests that World Bank management and staff have seriously manipulated the appraisal of the purported economic viability of Bujagali, and may in fact have misled Executive Directors when support for the project was approved in December 2001. The International Rivers report documents that: The World Bank’s and IFC’s Project Appraisal Document for Bujagali contains major discrepancies with other relevant Bank documents regarding essential aspects of the project. Discrepancies include figures on crucial aspects of the project, such as the future demand for expensive power from Bujagali. The World Bank’s and IFC’s project documents misrepresent or withhold critical information from other Bank documents. They misrepresent the outcome of a private enterprise survey, which is used to justify the project, and do not inform readers that reports commissioned by IFC show a combined–cycle plant and geothermal energy to be the least–cost sources of power for Uganda. The Bank’s and IFC’s project documents neglect evidence from other Bank projects, and from other official sources, on important features of the Bujagali project and Uganda’s power sector. Aspects which have been neglected include the potential impact of climate change on Bujagali’s hydrology. Finally, the World Bank’s and IFC’s projections have already been proven over–optimistic regarding the growth of Uganda’s export revenues, and overall economic growth. In conclusion, the International Rivers report puts forward strong evidence that Bujagali is not the least–cost option for Uganda’s power sector, that the project is economically highly unfavorable, and that it will add to Uganda’s debt burden – at a time when the IMF and IDA have recently expressed concern about Uganda’s "very high debt indicators. Since the Executive Board approved IFC and IDA funds for Bujagali in December 2001, the context of the project has changed significantly. The International Rivers report produces serious evidence that Bank management and staff have misrepresented or withheld relevant information on Bujagali. Export credit agencies have declined involvement for economic reasons, which should encourage the Bank to reconsider the viability of the project. Finally, Uganda’s economic situation and debt outlook have deteriorated sharply since December 2001, as documented by an IMF/IDA report in April 2002. We recommend that before taking any further decisions on Bujagali, the Executive Board should insist that the following conditions are met: The World Bank Inspection Panel should submit its report on the Bujagali project to the Board and the claimants, and the Board should have the chance of an informed debate on the Panel’s findings. A comprehensive and balanced assessment of all options for Uganda’s power sector should be carried out and submitted to the Board for discussion. In particular, such an assessment should take an in–depth look at geothermal power, which appears to be the least–cost option in the assessment done for IFC by Acres International. If MIGA continues to consider supporting the Bujagali project, the economic viability of the project should be reappraised with a more realistic view of essential project and sector features, and taking into account the recent economic down–turn in Uganda. The World Bank should request that the Bujagali Power Purchase Agreement be made public, so that the interested public can have an informed debate about the Ugandan government’s long–term obligations under it. Civil society in Uganda should have the chance of an informed debate about the Inspection Panel report, the conclusions of an effective options assessment and the Power Purchase Agreement. The Executive Board should take such a debate into account before reconsidering the Bujagali project or its alternatives. Thank you for your consideration of these concerns and recommendations. Sincerely yours,
Frank Muramuzi, President
Juliette Majot, Executive Director
Carol Welch OTHER ENDORSERS (listed by country) UGANDA
Martin Musumba
Basalirwa Asuman
Beatrice Obbo
Kamese Geoffrey
Timothy Byakola
Rosemary Namirembe
Kimbowa Richard
Sentamu Somon
David R. Mutekanga
Kenneth Kakuru
Tabaro Denis and Weizire James
Dranda Richard
Dr. Waiswa G. Baker
S. B. Tindifa
Kalema Billy
F. C. Oweyegha–Afunaduula
Kayondo Fred
Mugisa Patricia
Alfred T. Balinda
Prof. Jassy Kwesiga and Jane Nabunnya
Fredric Musisi Kabuye
Dick Nuwamanya
Bautu Robert
Isoto Bibian
Mayanga Dan
Jane Afra Musinguzi Deo Lubega Sylivia Birungi ARGENTINA
Elba Stancich
Jorge Cappatto
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