EU commits $127 million for Bujagali dam

21 November 2006

European Investment Bank to provide funds for controversial Uganda dam

The European Union announced last week that it would contribute $127 million toward the construction of the Bujagali Hydroelectric Dam. The funds are reportedly to be provided by the European Investment Bank (EIB), an EU financial body, which has taken the lead in financing infrastructure projects in Africa on the EU’s behalf. The funds will comprise roughly one-third of the estimated $350 million total cost (revised from $582 million) of the 250 MW capacity plant located on the Victoria Nile River.

The World Bank’s Managing Director, Juan Daboub, also recently reaffirmed the World Bank’s commitment to help “fast-track the construction” of the plant, which has been revived after the project stalled in 2002 over corruption concerns and the private sector sponsor withdrew from the project in 2004. The International Finance Corporation, the World Bank Group’s private sector lending arm, has reportedly proposed a $100 million investment in the project, though it has not disclosed its documents to the public.

With a new investor and continued commitment from the World Bank and now the European Union to support the project, despite persistent civil society concerns, the government of Uganda expects to complete the dam’s construction in 2010. Although proponents claim the completion of the 250 MW dam will provide a solution to Uganda’s energy woes, some observers point out that long-term projections of the dam’s power generation capacity may be overly optimistic considering the diminished water levels of Lake Victoria and the anticipated impacts of climate change on the hydrology of the Nile River basin.

The World Bank has not responded to date to a letter sent by concerned civil society groups who questioned the Bank’s renewed support for the project despite the potential social impacts, the high cost, the impacts on the water levels of Lake Victoria and the Nile River, and doubts about whether Bujagali is the best option to meet Uganda’s energy needs.

Additional Resources

• European Union Clarifies On Bujagali by Brenda Ankunda, East African Business Week, November 20, 2006 (AllAfrica.com)
• World Bank to Support Uganda in Investment Reforms, The East African, November 14, 2006 (AllAfrica.com)
• EU tips $20 million for Bujagali power, East African Business Week, November 13, 2006 (AllAfrica.com)
• NGO Letter to the World Bank on Bujagali, November 2, 2006 (Acrobat PDF 123 KB)