Uganda: Dammed if you do, damned if you don't

New African, Oct 2007 by Price, Stuart

The green light has finally been given to a controversial multi-million dollar hydro-electric dam project on the River Nile. But, Stuart Price asks, will it be the silver bullet to Uganda's stifling power shortages, or will it leave the country precariously exposed to the consequences of climate change?

An advert which has been running on one of Kampala's main FM radio stations for over a year now has individuals from different businesses bemoaning the lack of electricity. "We don't have power," says one; "Power blew up the equipment," laments the second; "Come back when there is power," advises another. "Sad isn't it?" declares the suave voiceover. "Who is not aware of Uganda's power problems?" he asks.

Although a light-hearted poke at the situation, the advertisement draws attention to a serious problem endured for many months now by businesses and the public alike.

A shortfall in hydro-electric power generation coupled with a mushrooming demand outstripping supply since early 2006, means the country has suffered from power outages for 24 hours or more at a time. The effect on businesses large and small, as well as the country's annual economic growth, has been punitive. But a new hydro-electric project to come onstream in four years time could change all that.

Thirteen years after its conception, the $800m hydro-electric dam on the White Nile is about to begin. The Bujagali project, the biggest foreign investment ever in East Africa, has been and remains controversial. Plans have been dogged by years of financial discord, allegations of corruption, and continued opposition from environmentalists.

In 2003, the US power company AES, despite standing to make healthy profits from owning and operating the dam, abandoned plans to construct the project, claiming financial difficulties. But bribery allegations between a Uganda World Bank official and a contractor dirtied the whole project, leading to its abandonment. Two years later, Bujagali Energy Limited was formed between Kenya's Industrial Promotion Services and SG Bujagali Holdings Ltd, an affiliate of the American company, Sithe Global Power.

Now, with the World Bank's approval of $360m in loans and guarantees at the end of April, the project can take off. According to the World Bank, the project is "an integral component of Uganda's strategy to close an energy supply gap that seriously constrains social and economic development".

The site, just below Bujagali Falls, around 1Okm south from where the White Nile flows out of Lake Victoria, the largest tropical freshwater body of its kind in the world, will see a 30m-high dam constructed across the raging Nile to enhance the natural power of the river's flow.

The World Bank claims the completion of the project will curb blackouts, encourage economic growth and improve the quality of life for millions of Ugandans.

"Uganda's workforce is expected to double over the next 15 years, making the creation of jobs through expanded industry, tourism, and commercial services critical," commented Judy O'Connor, the World Bank country director for Uganda. "These sectors are energy intensive and will therefore rely on consistent, affordable, and expanding power supply. Bujagali is an important step towards realising the needed level and quality of supply."

With only 5% of Ugandan homes serviced by electricity, no-one is in any doubt that the increased provision of this basic amenity is fondamental for development and quality of life. A glance at a time-lapsed photograph from space showing the electrification of the world at night glaringly highlights the lack of power across much of Africa outside its major urban centres.

"When the dam is finished we will be rid of the darkness," Daudi Migereko, the country's energy minister proudly announced when approving the project.

But the price of progress often comes at a cost. Bujagali is the starting point for some of the best whitewater rafting and kayaking in the world and a major draw for some of the more adventurous tourists visiting Uganda. The construction of the dam will see this disappear forever.

In addition, the area flooded behind the dam wall will displace many families who all need relocating.

Commenting on the power crisis, President Yoweri Museveni admitted that the shortfall of electricity supply was affecting the whole modern sector of Uganda, causing factories, hotels, offices, homesteads and butcheries, among others, to suffer. "Those who are able are forced to buy standby generators, which increase their costs of production and undermine the competitiveness of our businesses on the international markets," the president added.

Many businesses have adapted to the shortages - albeit at their own, and then subsequently their customers, expense. While the introduction of expensive thermal-generated power has seen an increase in power delivery for some areas in the capital, Kampala, this has led to a doubling of electricity prices over the last 12 months. Sadly, not everyone has been able to absorb the increments.