Uganda's President Yoweri Museveni shakes hands with the Aga Khan
Uganda's President Yoweri Museveni shakes hands with the Aga Khan
Uganda's President Yoweri Museveni (L) and His Highness the Aga Khan (R) prepare to lay the foundation stone
On August 21, Uganda’s President Yoweri Museveni and the Aga Khan, Prince Karim al-Hussaini, spiritual leader of the Ismaili Muslims, laid the foundation stone for the Bujagali hydropower dam on the Nile River in a show of commitment to address Uganda's continuing energy crisis. The 250 MW project, co-financed by the World Bank Group, is a major component of Uganda's answer to an electricity supply gap that in recent years has made rolling blackouts a daily reality for Ugandan residents, businesses, and services. The Aga Khan's Fund for Economic Development supports the Bujagali project through its subsidiary development firm, Industrial Promotion Services ( Kenya), which, along with Sithe Global (U.S.), comprises the project’s development company, Bujagali Energy Limited or BEL. With the Aga Khan at his side, Museveni urged other African leaders and development partners to face the reality that the continent suffers an energy crisis, which is not only the largest impediment to economic growth, but also at the root of major environmental and other development challenges. Addressing environmental critics, the president reiterated that the environmental aspects of the Bujagali Project had been extensively studied and debated. “I wish to assure the public that the Government of Uganda, working with the project sponsor, BEL will ensure that all the identified mitigation measures are satisfactorily implemented,” Museveni said.
He maintained that, while it is important to address legitimate concerns raised about the impact of the dam on the local environment, the project is necessary for Uganda’s development. “You cannot claim to be protecting the environment when you are denying over 90 percent of the population access to electricity,” he said.
Museveni said hydro power is a cheaper alternative than thermal energy, which is presently being used to address the power shortage.
Bujagali is the largest single private sector investment in East Africa, the biggest independent power project in sub-Saharan Africa, as well as the largest single project ever funded by the International Finance Corporation (IFC) in the world, the Aga Khan said in his speech to media and others attending the event.
In April 2007, The IFC, the Multilateral Investment Guarantee Agency and the International Development Association approved US$360 million in loans and guarantees for BEL, the Government of Uganda, and commercial lenders to go ahead with the project.
Through its specially created Energy Fund, the Government of Uganda in July 2007 made available an advance US$75 million enabling work to commence while the lenders put together the required financing for the project. The Government also provided US$17.5 million to implement the Resettlement Action Plan (RAP) for the Bujagali transmission line.
The Aga Khan noted the effort involved in getting the project started.
“It’s not easy to attract traditional private investment capital for an ambitious infrastructure project in the developing world," he said. But, "a long road of discussions and debates, negotiations and bids, adjustments and agreements with a wide array of partners” ended in success.
The project is expected to provide badly-needed electricity, boost industry and provide employment for local people during the construction phase as well as later on in the industry and service sectors, according to Uganda’s Minister of Energy and Mineral Development Hon. Daudi Migereko.
The Bujagali site is located roughly eight kilometers downstream from the source of the Nile in Lake Victoria and the existing Nalubaale and Kiira hydropower plants. As a run-of-river hydropower facility, the dam will re-use the water flowing from the upstream power plants to generate additional electricity.
The added power is expected to increase the supply to the national power grid at the lowest cost compared to other power generation options under Uganda’s energy sector expansion strategy.
Uganda's energy strategy also includes a Power Sector Development Operation (US$300 million) approved separately by the World Bank Group in April 2007 that, among other things, provides funding for a set of investments and policy measures designed to reduce the supply-demand gap.
Support is also provided through three ongoing projects: the Power IV investment project (US$62 million), supporting improved power supply and government capacity to manage sector reform; the Energy for Rural Transformation Project (US$50 million), which supports the development of rural areas’ access to renewable electricity; and US$40 million in investment guarantees for an electricity distribution company.
The Bujagali Hydropower Project has undergone extensive economic, environmental, and social due diligence. Documents made available to the public include the Project Economic Analysis — prepared by an independent consultant — and the Power Purchase Agreement. Consultations between BEL and communities surrounding the dam site have been ongoing throughout the project.
Attending Tuesday’s event from the World Bank:
John McIntire, Country Director, Tanzania and Uganda
Rashad Kaldany, Infrastructure Director, IFC
Darius Lilaoononwala, Senior Manager, IFC
Jean Philippe Prosper, Senior Manager, IFC
Dan Kasirye, Investment Officer, IFC
Grace Yabrudy, Country Manager, Uganda
Paul Baringanire, Energy Specialist
Michael Silverman, Lead Counsel
Suman Babbar, Consultant
.C.