5 - Electricity & the Politics of Transformation

Summary

The Government of Uganda and the World Bank's commitment to the Bujagali project did not wane. In April 2007, the World Bank Group approved US$360 million in loans and guarantees for the project (Bujagali II) – $130 million in loans to Bujagali Energy Ltd (BEL) from the International Finance Corporation; a Partial Risk Guarantee of up to $115 million from the International Development Association; and an investment guarantee of up to $115 million from the Multilateral Investment Guarantee Agency. Financial support for the project also came from the African Development Bank ($110 million) along with the European Investment Bank and the German Bank for Development. The new total estimated cost of the project was US$799 million. Up almost US$300 million from the original project cost, Ministry of Energy sources reported that the increased cost was a result of higher prices for oil, cement, steel, iron and consultancy services (Mugirya 2007).

The second Bujagali project (Bujagali II) did not go without controversy, however. The National Association of Professional Environmentalists (NAPE) continued to voice concerns about the project. Their major anxieties remained the cost of the project, the expected rise in future electricity tariffs, and hydrological concerns surrounding drought and climate, fisheries and protected land. Moreover, NAPE continued to take its concerns to the World Bank and other project financiers. Senior Bank officials responded to these concerns openly and directly. Michel Wormser, World Bank Sector Director for Sustainable Development, Africa Region, stated: ‘The World Bank Management remains committed to the successful implementation of this project including the appropriate application of relevant environmental and social safeguards … The project is critical to Uganda's economic development and we will continue to work with the Government to ensure that this project meets high standards’ (Kasita 2007). In the same interview with Ugandan media, Wormser said: ‘The project's approval reflected a shared view by management and the board of the critical importance of providing a new source of electricity expeditiously to Uganda and confidence that thorough economic, environmental and social due diligence has been undertaken to identify and realise that source’ (ibid). As one indicator that the Bank learned from some of the transparency problems encountered in its support for the dam, it created a comprehensive website solely dedicated to the project.