World Bank, EIB to release funds for Bujagali Dam as investigations into safeguard violations continue
17 January 2008
Construction of the dam proceeds despite an ongoing investigation into claims presented by civil society groups that the project violates environmental and social standards of both the World Bank and the African Development Bank (AfDB).
According to press releases from the World Bank and European Investment Bank (EIB), project sponsors and investors achieved “financial closure” for Uganda’s controversial Bujagali Hydroelectric Project in late December, triggering the release of funds to continue construction on the dam, estimated to cost $800 million.
Meanwhile, pronouncements about the virtues of the project on the Victoria Nile have failed to alleviate persistent concerns over the project’s economic and environmental viability. Observers such as Uganda’s National Association of Professional Environmentalists (NAPE) contend that economic assessments based on the purported capacity of the dam, projected at 250 megawatts (MW) by the project’s sponsors, are unrealistic. Regional droughts and precipitous declines in the levels of Lake Victoria, the river’s source, have led NAPE to suggest that the output of the dam could be closer to 100 MW, making the power far too expensive. Recent studies by independent experts have also added to fears that the dam at Bujagali could slow the recovery of Lake Victoria and jeopardize the survival of fisheries.
Construction of the dam proceeds despite an ongoing investigation into claims presented by civil society groups that the project violates environmental and social standards of both the World Bank and the African Development Bank (AfDB). In July, the AfDB’s Board of Directors authorized a compliance review of the Bank’s investment in the project. The investigation, the first of its kind since the establishment of an Independent Review Mechanism to address citizen complaints, will seek to determine whether the AfDB violated its own policies in approving the projects and, if so, suggest remedial actions. The complaint to the IRM complements a similar investigation being undertaken by the World Bank’s accountability mechanism, the Inspection Panel. A joint team from the two review bodies visited Bujagali in November 2007.
The World Bank Group’s investment includes $360 million in loans and guarantees, while the AfDB and EIB have approved $128 million and $136 million respectively to finance the project and associated transmission lines.
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