Ugandan project faces attack over cost of power
By Alan Beattie in Washington
Financial Times, November 21 2002
Power from a controversial hydro-electric scheme for which Uganda is seeking World Bank backing could cost it far more than necessary, according to development campaigners.
Electricity from the proposed $550m Bujagali dam, which would be east Africa's largest single foreign direct investment project, could cost $280m more than necessary over the 30-year lifetime of the contract because of an unfavourable deal with AES, the US company due to build the dam, they said. Construction of the dam is suspended while the World Bank and the US Justice Department investigate allegations of corruption within the project.
International Rivers Network, an environmental campaign group, said that the confidential power purchase agreement (PPA) between the government controlled Ugandan Electricity Board and AES showed the payments to AES were far higher than in comparable projects.
"This project represents a serious burden for a highly indebted poor country like Uganda. This study clearly demonstrates that the World Bank has misled the public and provided bad advice to the Ugandan government," said Peter Bosshard of IRN.
Christian Wright, a business development manager and former Ugandan country director for AES, rejected the criticisms. "The PPA was reviewed for 11 months in the Ugandan parliament in full public view," he said. "In our minds it has already been accepted by the legitimate representatives of the people of Uganda."
The dam would provide the cheapest power in the region, and there were so few privately funded hydropower dams that comparing Bujagali with other projects meant little, he said. The release of the PPA has itself been a contentious issue within Uganda. Local non-governmental organisations have taken legal action to force the government to disclose the full document. The Ugandan high court ruled on November 12 that the PPA should be made public, but the government is thought to be planning an appeal.
A report earlier this year by independent World Bank inspectors also called for the PPA to be made public. Mr Wright said that AES had no objections to it being released, saying the company would comply with the law of Uganda.
The International Finance Corporation, the private sector arm of the World Bank, also rejected the criticisms.
contacts
www.irn.org
www.ifc.org/bujagali