The thing we learn from history is that we do not learn from history.
In 2002 AES subsidiary Nile Independent Power threw in the towel and gave up plans to build a 250 MW dam at Bujagali falls.
That year the Argentine parliament repealed the constitutional peg, which fixed the peso at per with the dollar. This action resulted in an almost 40 percent depreciation of the peso against the dollar. AES Argentine power projects were charging in pesos and saw their income fall similarly causing headaches for the company that was servicing loans contracted in dollars. This forced a restructuring of the company’s operations and Bujagali was a casualty.
This brought to a close a seven year odyssey that saw the company ducking and weaving through an obstacle course of archaic laws, parliamentary opposition and incessant sniping from a foreign backed environmental lobby.
AES wrote off the $70m in development costs and walked away.
Had AES got the necessary approvals a year or two earlier the Bujagali dam would be reality today.
This would mean cheaper power as the average tariff has been pushed up on our reliance on thermal generators burning the more expensive diesel. This would have meant more economic growth as investors would find Uganda a more attractive destination and existing businessmen would have lower costs and therefore improve their ability to expand. This would reduce among the urban population the need to use charcoal and therefore the resultant environment degradation. Who knows it might have even meant higher salaries for our honourable members.
Fast forward to 2008 and the foreign-backed environmentalists are still at their game. They have appealed to World Bank – a key financier of the project to put a stop to the dam which is already one-and-half years into construction.
Last week the World Bank dismissed their petition out of hand and renewed its commitment to the project. Which should be as it is.
Fortunately government’s resolve to see the project through, helped by the more than doubling of power tarrifs in the last three years reduced opposition to the project to a murmur. Which was very fortunate for Uganda.
When the current Bujagali project, promoted by the Aga Khan’s Industrial Promotion Services, went looking for money to finance the project the response was such that they had to turn away lenders. The world financial markets were aflush with cash and people were falling over themselves to be a part of this project.
However the current global credit crunch makes it impossible to source finance for such projects – see the abandonment of the Karuma falls project.
In terms of power generation we are way behind the region and generation even far less than we need to fuel the 7 percent economic growth rate needed to half poverty levels by 2030.
There is no way around it, economic growth is critical to poverty alleviation, and energy is needed to power this growth. Without energy natural systems regress into chaos, which in our case means poverty and instability.
The environmentalist lobby’s need to earn a pay check by heckling development projects should not be put before the interests of the people.
The need for power is urgent and the cost of a lack of power at its most basic level, is counted in lives, the lives of babies who die for lack of power in their incubators for example.
The project has bent over backwards – even at the risk of generating more expensive power, to mitigate the environmental risk, compensate the owners of the land and even appease the spirit of Bujagali (one wonders how you enter that in the books), every concern has been taken into account and catered for as far as is currently possible.
Let there be no doubt in anybody’s mind that poverty is our most clear and present danger, and therefore more and more power generation is critical to our national stability.
Let us not be unsighted by short term considerations and focus on our long term strategic goal, which is poverty eradication.
Published December 2008, New Vision