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Veidekke consortium to build controversial plant: Dismay over Ugandan power plant

A consortium led by Veidekke ASA and consisting of Norwegian, Swedish, and Swiss companies, reported on November 20, 2000, that they had been granted the contract to build the Bujagali power plant on the Nile for America's AES. The power plant faces huge local resistance, and international hydropower experts question several aspects of the project, including the situation of the hundreds of people forced to move.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
A consortium led by Veidekke ASA and consisting of Norwegian, Swedish, and Swiss companies, reported on November 20, 2000, that they had been granted the contract to build the Bujagali power plant on the Nile for America's AES. The power plant faces huge local resistance, and international hydropower experts question several aspects of the project, including the situation of the hundreds of people forced to move.

By Morten Rønning

Ugandan authorities have decided to start construction of the country's second large hydropower plant after the existing Owen Falls. Uganda, long a star pupil of the IMF, has opened for private ownership in the energy sector. The fight for a green light from Ugandan authorities has been between America's AES Corporation (the Bujagali project) and Norway's Norpak (the Karuma project). AES is the world's biggest privately owned producer of energy.

Among the resistance to the Bujagali development we find the Save Bujagali Crusade (SBC), which says it acts on behalf of the hundreds of people forced by the project to leave their homes. The SBC was formed in 1998 by former district chairman Martin Musumba, and has more than 1,000 members.

According to the SBC, the Jinja district is one of the most densely populated areas in Uganda, and providing the forcibly relocated people with alternative lands will present huge problems. About half of these people live by fishing in the Nile. According to AES, reservoir fisheries will increase the catch in the area, but this is rejected by the International Rivers Network, which claims that the opposite has been the case in several other projects, such as Pak Mun in Thailand.

Uganda's Fisheries Research Programme has warned of the risk of water hyacinth blooms in connection with the development of the reservoir. These plants have spread at an incredible rate in several African lakes, and in some places, they have destroyed fisheries.

Kai Krger Henriksen, head of information in Veidekke ASA, is aware that there is local resistance to the project, and tells NorWatch that the company always takes such input seriously. Henriksen stresses that a number of studies are still to be made with regard to environmental impacts and the situation of the local people.

Forced relocation
There are varying figures for how many people will have to move, and how many others will be affected by the development. AES uses a figure of 44 households (820 people) who have to move, and a total of 180 households affected by the loss of land.

The Canadian consultancy Acres International has made a study of the project, and their respective figures are 682 affected households (5,700 people) and as many as 180 households (1,553 people) who will have to move.

In a press release dated November 20, 2000, Veidekke ASA cites a figure of 35 families forced to move, and adds that some farmland in the river profile will have to be compensated. Veidekke's Henriksen hints rather strongly that the number of people said to be affected may increase, precisely because people are tempted by the opportunity for being awarded compensation. He stresses that for the developer, it is vitally important to get objective information, to the extent that such information exists.

According to the SBC, Bujagali Falls is a popular aim for tourists, but the development will cause the waterfalls to lose much of their appeal. According to Veidekke's press release, "some rapids for rafting will be lost".

The waterfalls are also said to play a part as a cultural and religious centre due to the presence of the Spirit of Bujagali. This spirit, the 39th in its lineage, resides at the waterfall and protects the locals by carrying out traditional rituals by the waterfall. According to AES' environment study, the spirit is willing to be relocated.

The Bujagali power plant will be linked to the existing Owen Falls plant, as well as to Kampala, the capital, over the grid. Project critics point out that the project thus will not lead to electrification of the countryside, as the Karuma project, now shelved, might have done.

The Ugandan government will probably buy Bujagali's entire energy output, but in August 2000 critics, among them academics and lawyers, said in a letter to the World Bank and the International Finance Corporation (IFC) that the power from Bujagali will be too expensive for the local population, so the result will be that the energy is exported.

International Committee on Dams, Rivers and People (ICDRP), consisting of several NGOs worldwide focusing on rivers, have recently presented a report where they have assessed several dams, including Bujagali, in the light of the recommendations of the World Comission on Dams (WCD) report.

ICDRP notes that the power plant will not lead to the electrification of the Ugandan countryside, and that only 7% of the country's population can afford to buy electricity at market rates. The report also questions the risk to the Ugandan government. The government has made a secret purchasing agreement with AES for the plant's power output. ICDRP suggests that the government has obliged itself to purchasing all the power produced, regardless of whether there are any takers for it, and regardless of whether the power plant will in fact be able to produce any power at all. ICDRP also points out that important issues were never properly studied prior to the decision to build the plant. This concerns e.g. alternative forms of energy that would have benefited the rural population more, such as solar energy, small-scale hydroelectricity, and geothermal energy.

From Norway with love
Norway has played an important part within the Ugandan energy sector. Norway has financed parts of Owen Falls-plant, which today is being enhanced and extended. Kvaerner is one of the plant's suppliers, with financial support from Norad. The country's new energy legislation, passed in 1999, which allows power plants to be privatised, was created with assistance from The Norwegian Water Resources and Energy Directorate (NVE). In an article in their magazine Fivasskraft (2/2000), Norwegian NGO FIVAS asks whether the Norwegian involvement benefits the local people, or only opens up doors for Norwegian industry.

In the same issue, FIVAS, participating in ICDRP, reports that it was the Norwegian Guarantee Institute for Export Credits (GIEK) that gave the thumbs-down for Norpak's Karuma project. On the other hand, GIEK has made guarantees for the Veidekke consortium that is to develop Bujagali.

(See also: http://www.irn.org/wcd/bujagali.shtml http://irn.org/programs/bujagali/ , http://www.uganda.co.ug/bujagali/  )

"We always take local criticism of development projects very, very seriously, but it is important to get objective information, if such information exists."
- Information director, Kai Krger Henriksen, Veidekke ASA, 20.11.2000

"There is no reason for a country like Uganda to subsidise a multinational company like the AES."
- Martin Musumba, The Save Bujagali Crusade.

Veidekke in Uganda
Veidekke ASA heads a consortium that was recently awarded contracts worth NOK 1.5 billion for the development of Bujagali Falls, led by the US firm AES Corp. According to Veidekke, the dam is to be 850 metres long, and the reservoir will cover 390 hectares (750,000 cubic metres). The plant's output will be 200 MW. Construction starts in the summer of 2001, and will finish in 44 months. The total value of the contracts for the project is USD 320 million. Besides Veidekke, the consortium consists of ABB Distribution, Alstom Power, GE Energy (formerly Kvaerner Energy), and Norplan.

Norwatch Newsletter 11/00