By Pia A. Gaarder
Ole Gran works in ABB Structured Finance and has followed the Bujagali project for years. His opinion is that a lot of directly false information about the project is circulating, and he is not happy about the image of a greedy American energy company that is going to exploit Uganda.
- If the project fails, it's AES who will loose their money first. They have put up considerable capital, something that makes it possible for loan givers to contribute with the rest, says Ole Gran.
- The whole project will cost approximately 580 million dollars. How much does AES put up?
- That is classified information.
- But is it correct that in the power agreement Uganda is committed to pay 100 million dollars annually for deliveries of power from Bujagali?
- Yes, but these are money going to the project company, not directly to AES. I have myself read the part of the power deal that is said to be secret. And it is not correct that AES receive 100 milion dollars annually and put the money in their own pockets. It is completely wrong when it is said that American AES will earn grossly in the project and poor Uganda will pay.
- The project company is gathering money to pay it's debt to among others the World Bank. Uganda does not have the money to finance such an investment itself. AES will be paid back their investments in the course of 30 years. This is not about supporting rich Americans from the poor countries. This whole angle is completely wrong, says Ole Gran.
High interests to third world countries
- In the payment of 100 million dollars every year for ten years ahead lies the running costs, but the amount is still huge. Isn't the (tappingen) of the third world happening because the high interests third world countries has to pay?
- The profit margin that AES gets from the project is still lower than the profit margin that Norwegian state organization Norfund demands when assessing investments in third world countries. They demand a profit of more than 20 percent. It is the loan-givers that are paid first, then AES gets their money.
- What are the interests on the loans to Bujagali?
- The interests on financing are not public, but it reflects the risk in Uganda. Unless projects manage to attract private investors and willing development banks, there are no banks that are willing to bet on Uganda.
Out of the loop
- Shoud the project be torpedoed by the NGO's or other, there will not be any investments in Uganda from private investors. Today there is not enough capacity on the grid - even for the few who are connected. It is not very likely that other private investors will come in if AES won't make it. Then one has to go back to the old critisized method that only increase state debt in the third world, that is loaning governments money directly.
- What happens if GIEK were to say no to giving export credits?
- I don't think GIEK will say no. But if it were to happen, we are out of the loop and loose our rights to be part of the project. Then I don't know what we will do.
Norwatch Newsletter 3-4/02