21 August 2007

Uganda: Bujagali Dam Work Starts

Kampala — President Yoweri Museveni and the Aga Khan yesterday laid the foundation stone of what will go down in history as the biggest private investment in East-Africa and the largest independent power project in sub-Saharan Africa.

The Bujagali Dam, with a total price tag of $770m, is expected to generate 250 Megawatt by the time it is completed in 2011. At the launch, which was attended by ministers, MPs and religious leaders, Museveni said the Bujagali project had delayed because of what he called 'criminal sabotage' by politicians.

"How can you talk for 15 years about 250 Megawatts and you say you are serious? This is a disgrace.

You go to a country like USA which produces 800,000 Megawatts. Government officials and politicians must wake up!"

He also blamed himself for keeping quiet about the looming energy crisis. "This was a big mistake in my public career. It was like Pontius Pilate who participated in killing Jesus by keeping quiet. It was my mistake and I repent my sins," he said, drawing bolts of laughter.

The Government injected $75m from the energy fund into the Bujagali project ahead of the lenders' contribution, and another $17.5m for the resettlement of people living along the transmission line, he stressed. "Once the lenders are ready with the financing, this money will be recovered and injected into other power projects."

Hydro-electric power is six times cheaper than thermal energy, which is presently being used to address the power shortage, Museveni pointed out.

"Hydro-power production cost is now at 3.9 US cents per unit while thermal generation is at 23 US cents. This has necessitated the provision of huge subsidies from the Government to bring down the cost of electricity."

The President once again lashed out at environmentalists whom he accused of ignorance.

"How are the 31m people cooking? They are using firewood. The last time I checked, Uganda was destroying 28b cubic meters of wood in the form of enku (firewood) per year. How can you talk about the environment when you do not know that?" he wondered.

He called upon the international community, particularly the Europeans and Americans, to stop listening to 'amateurs' on environmental matters, offering them consultancy services "free of charge" instead.

Besides hydro-power, the President said, the Government was also looking at other renewable energy sources, such as biomass, solar, wind, geo-thermal and gas.

He announced that a gas-fire power plant would be built in Hoima in the short term, which would generate 90 Megawatts, following the recent discovery of gas in the area.

Referring to the Aga Khan's plan to set up an airline in Uganda, he noted that by 2009, the country will produce its own aviation fuel, which will make Entebbe more competitive.

Museveni said he looked forward to commissioning the dam in 2011, adding "and as you know, I will still be around then".

Earlier, the Aga Khan, whose foundation is the project developer and one of the shareholders, called the ground-breaking ceremony a "historic moment" and the opening of a new era in African history.

"It is the largest single power investment ever made by the International Finance Corporation anywhere in the world", the Aga Khan noted.

The IFC, the private-sector lending arm of the World Bank, is contributing $130m to the project.

The spiritual leader of the Ismaili Muslims confessed it had not been easy to attract private capital for this kind of ambitious project in a developing country.

But with the support of the Ugandan Government, the World Bank and other multi-national lenders, he said, the equity financing was actually over-subscribed.

The Aga Khan Fund had taken up the project because it provided clean and affordable energy, thus advancing sustainable development while minimizing its environmental impact, His Highness explained.

"Everywhere in the world today, people are searching for ways to reduce the threat of global warming both by limiting greenhouse gas emissions and by fighting the blight of deforestation Hydro electric power fulfills that goal."

He noted that Africa, with one-sixth of the world's population, produced only four percent of the world's electricity.

He also pointed out that only five percent of Uganda's total population and only one percent of the rural population had access to electricity. Even for those who have access, he said, electricity tariffs had more than doubled in the last four years.

"These skyrocketing costs work to reinforce the cycle of poverty for millions and they badly impair the ability of Ugandan companies to compete in international markets."

He predicted that the cost of power as a result of Bujagali would be cut by half in the early stages of the project, and by half again in the later stages.

Energy minister Daudi Migereko stressed that the project was handled in an open, transparent and competitive manner. He also emphasised that they had addressed the concerns of the environmentalists.

"Unfortunately, some of them are prepared to settle for nothing short of stopping the project. But NEMA and other agencies approved the project and are monitoring it."

The local community supported the project since they expect employment, business opportunities and electricity, he noted.

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