New Vision (Kampala)

10 July 2012

Uganda: Sh4.2 Billion Compensation for Karuma Power Project Starts

Photo: Bujagali Energy Limited
Bujagali dam.

The process of paying and resettling people whose livelihood will be affected by the proposed 600 megawatt (MW) Karuma Hydropower Project has started.

The project, which will become the single biggest power dam in the East Africa region when completed, needs 465.52 hectares of land.

It will occupy Karuma, Awoo, Nora and Akurudia villages in Kiryadongo districts, affecting 414 families.

"I am willing to relocate because we will be switching on the bulbs rather than using kerosene lamps for lighting," says Mzee Alfred Ocing, a resident.

"I need the cash to buy cheap land elsewhere, build a house and connect it with electrical wires and poles. I will use the rest to start small business for daily income."

Although the residents support the project, some are not happy with compensation rates.

"The government should pay us reasonably," Peter Etot, another resident, said.

He, however, added that the project is good as it will create jobs for the youth and enable residents access electricity.

Many residents in the project affected area found out that most of the families live in mud and wattle grass thatched huts and depend on growing cotton, maize, banana, sugarcane, tobacco and cassava.

The majority of youth are engaged in selling roasted maize, chicken, matooke and cassava to travellers on the Gulu/Arua-Kampala Highway.

Others depend on the nearby fishing areas close to the project intake and they will be restricted to access the fishing grounds when construction commences.

Karuma Township is dominated by local farming activities and scattered low income settlements adjacent to the dam diversion channel.

Some part of the township will be demolished by the owners must be compensated.

Energy Infrastructure (PVT) of India, has been hired to implement the resettlement action plan and compensation of the people affected by the project.

"We are in the process of verification and disclosure of the rightful persons and the property that should be compensated," explains Bernard Ocula, the team leader.

He says compensation is based on the consent of household head at the time of assessment.

"The money is paid the household head on behalf of the family. There are two forms of payments, says Ocula.

"Cash is paid for amounts not more than sh200, 000. Above this amount the money is transferred to the household head bank account."

The verification and disclosure process is an opportunity for the persons affected by the project to find out their details are correct, the property and amount to compensated is accurate and whether the person to be compensated is genuine or not.

The process also allows unsatisfied persons affected by the project to lodge their complaints in writing for their grievances to consideration.

"When all grievances have been settled then payment starts and it will be done in three weeks," he said. "The idea is to make sure by end of August 90% of the people affected by the project are paid."

However, there are concerns that compensated persons may misuse the money and end-up becoming worse-off especially the vulnerable persons like the elders, widows, disabled and the sick.

James Banaabe, the commissioner in the ministry of energy and mineral development, explains that government will build houses in plots identified the persons affected by the project.

"We have options. Those people who don't want cash are advised to identify a plot of their choice and we shall build a house for that person," he says.

"For persons wishing to get cash, we first counsel them on the best way to use their money so that they make good decisions. The goal is to make them better than before."

Ocula adds that affected persons whose payment is below sh1m will have houses built for them.

He says that there will be a livelihood assessments study to understand the current social economic activities of the households.

"We insist that there should be livelihood activities that will boost income and we are looking at purchasing land for the resettled community."

Already a team comprised of the physical planners, environment officers, chief administrative officers, land board officers and community development officers are in place to monitor activities.

"The team should help on managing the transition from resettlement to the project execution," Ocula says.

"The project should uplift the lives of the people. People should not be worse-off than before. That is why we are carrying out the verification and disclosure exercise."

Why Karum power project is critical

Uganda has one of the world's lowest levels of electricity development as well as the lowest per capita electricity consumption.

Over 90% of the population is not connected to the national grid. The current levels of electricity supply cannot support heavy industries.

The current situation of power demand and power supply options for Uganda indicate that Karuma hydropower project is a very justified development as it will add up to 600 MW to the national grid.

The project, which is estimated to cost $2.2b, is the least cost solution to address the short, medium and long term electricity shortage in Uganda.

It will deliver electricity to consumers at a levelised price of sh180 per unit over a period of four decades. The current unit cost for domestic consumers is sh526.

The project will improve their standard of living as the access cheap electricity is eased.

Karuma project background

The proposed project was conceived in early 1990s as a potential site to generate 200 megawatts (MW).

In mid-1990s a Norwegian firm, Norpak) acquired exclusive rights to develop the project. However the firm held on-and-off negotiations with government to start work.

But with the prospect of development the 250MW Bujagali hydropower project in late 1990s and early 2000s, the project came to a standstill.

And early 2008, Norpak pulled out after a protracted conflict with the World Bank. It handed the project designs, maps, ground investigations and other information to government.

The government made a decision to increase capacity from 200MW to the current 600MW after feasibility studies confirmed that the water flow could generated that amount of energy. The studies were concluded in 2010.

President Yoweri Museveni ordered that the money in the energy fund ($75m) to kick-start the project. This was the same amount that was used to kick-start the construction of the 250MW Buagali hydropower project.

Museveni also directed that all the oil money close to $800m be channeled to finance the project construction.

The energy ministry is in the process of procuring the contractor. Due diligence on the interest bidders is on-going. Work on the dam is expected to start in the fourth quarter.

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