Save Bujagali Crusade wish to express our sincere thanks and gratitude to the members of parliament for having rejected the Bujagali dam project. It was reported in the press that members of the Parliamentary Committees on the National Economy and Natural Resources in a joint meeting held on Thursday February 18, 1999, could not approve the Bujagali Project saying they were skeptical about the contract.

We wish to assure Parliament that they are having a lot of support among right thinking Ugandans and nationalists. In the best interest of this country, the dam should be constructed elsewhere, either at Karuma or Kalagala falls or at both sites. We need both power and Tourism.

Save Bujagali Crusade in this paper, wish to react to issues by Hon. Kaijuka as reported in the East African of February 15-21, 1999. The article entitled "Bujagali Dam Firm has already spent a colossal sum" shows lack of patriotism on the part of Hon. Kaijuka" Below are our responses to various critical issues raised.

Investor has spent a colossal amount

When asked why the project was not subjected to competitive bidding, the Minister was reported to have arrogantly responded, " After all the Bujagali dam farm has already spent a colossal sum". By that statement, it is implied the Ugandans should keep quiet since nothing could be done about the project. The Project has to be undertaken. On different occasions the Minister and Mr. Christian Wright, in an effort to intimidate and silence Ugandans and lure parliament into approving the project, have given a figure of US $ 10 million as the amount so far spent on the project. It is part of International business for investors to spend large sums of money on Research and feasibility studies on new ventures. More often than not these expensive studies declare projects not viable. When it happens the investors abandon the particular project and look for another business venture. This is the risk to be born by an entrepreneur world wide. Carrying out studies is not a guarantee that the project will be undertaken. AES/Nile power is not therefore the first investor to spend money on feasibility studies on projects that are not viable. An oil exploration Company spent larger sums of money in Western Uganda prospecting for oil in thee early 90s but abandoned the project when it was found unviable. Government was not ransomed against that cost.

It should further be noted that according the clarification to parliament on issues and questions raised, by the Honorable Minister stated on page 2 while answering questions on why Bujagali project should be developed first and not Kalagala or Karuma stated, "Two developers AES and Arabian International Construction Ltd (AIC) were granted rights to develop Bujagali and Kalagala respectively. Both developers completed their detailed feasibility studies in 1998 and the sites were ready for development". This statement means it is not only AES that have spent money. AIC also met equivalent expenditure.

The expenditure is not the issue but of the two sites where does Uganda as a nation get maximum economic benefits. Is it at Kalagala or Bujagali ? Save Bujagali Crusade believes that Kalagala dam is a better project, since it allows the country to get economic benefits from both electricity and tourism

World Bank gave support to government

Investment sources have revealed that the World Bank gave the Ministry of Energy and Mineral Development US $ 1 million (shs 1.3 billion) for legal support services for the PPA. The services were to be provided by Hunton and Willams. The Ministry, however, has over ran the budget by US $ 1.6 million (shs 2 billion) without authority from the World Bank. The Bank is disappointed and may not pick the bill. The ministry hopes that in the event that World Bank refuses to pay, AES or AIC will meet the cost so that Hunton and Willams can be paid. This partly explains why the minister is fighting tooth and nail to have the project approved by parliament by hook or crook. The Ministry should be held responsible for spending a colossal US $ 1.6 million without authority.

Loser to get US $ 4 million

Investment sources have further revealed that, under the auspices of the Minster, AES and AIC have agreed that the party that wins should pay the loser US $ 4 million. This came after the Minister realized that whereas both AES and AIC were granted rights to develop Bujagali and Kalagala respectively, the two projects cannot be implemented concurrently. Hunton and Willams are preparing separate PPAs for AES and AIC. In the event that one of the project is approved the loser will get US $ 4 million as a form of compensation. Such a deal has never been undertaken anywhere in the world. The US $ 4 million is a cost to be reflected in the cost of power. The Ministry is presenting the Bujagali Project as a joint proposal of AES and AIC to confuse Parliament. They have further reduced the power potential of Bujagali and Kalagala so that the two independent project are approved jointly.

Save Bujagali Crusade wish to petition parliament to investigate this issue before action is taken on the project.

Economic tourism potential of bujagali

When asked about the opportunity cost to be forgone by constructing a dam at Bujagali, Hon. Kaijuka arrogantly answered, " The dam in itself will have its own tourist attraction," The Minister implied that the tourism income forgone at Bujagali Falls shall be recovered since the Bujagali dam will attract tourists.

The Owen falls dam created the largest water reservoir in the World with 270 cubic kilometers of water. However since 1954, the dam has never had any tourist attractions. There has been no skiing, swimming, fishing or any other economic activity on that reservoir. In fact the best tourist attraction in Uganda and East Africa, the source of the Nile, was lost. What guarantee does the Minister have that the Bujagali reservoir will have better tourist attractions ?

Ugandans should be informed that Bujagali falls is a spectacular tourist attraction. It is considered among the best sites for white water rafting in the whole world. Victoria Falls on River Zambezi with optimum water flows for only six months receives 50,000 tourists a year. A total of US $ 50 million accrue from tourism annually from white water rafting. With 12 months of optimum flows and a better site, Bujagali falls can generate over US $ 100 million annually. Hotels are to be constructed at Bujagali, generating millions of dollars a year. The growth in tourism will also lead to development in other sectors of the economy. Agricultural Projection will be boasted in the neighboring districts. Although the people around Bujagali are excited with the promised compensation by AES, the value of land will dramatically increase with tourism. An acre of land which is likely to fetch about shs 0.250 million, will sell at over shs 50 million in less than two years, with increased tourism. Tourism will also create, employment and income for the people without displacing them. It is therefore the considered opinion of Save Bujagali Crusade that our low level of economic development with per capita income of US $ 250 we cannot as a country afford to destroy Bujagali tourist potential. Since we cannot transfer the spectacular Bujagali site, we should produce power at another site. Luckily, there are many sites where power can be produced at even lower costs. Investors willing to invest at the other sites are available and ready so what is the problem? Parliament should find out why the responsible ministry insists on Bujagali Dam despite the high opportunity cost to be incurred by the nation.

AES largest Private sector Investment.

In the said article and many other submissions the Honorable Minister Kaijuka and Mr. Christian Wright have insinuated that the largest private sector investment of AES so far attracted in the country should not be frustrated. As a nation our interest should not be the size of the investment rather the benefits from such investment and at what cost. As we stated earlier, there are many investors who are willing to produce the same amount of power or more at a lower cost. So Ugandans should not be blind folded by the size of investment. Further, Save Bujagali Crusade has found out from reliable government sources that ENRON, an American IPP with a turnover of US $ 20 billion as compared to AES with US $ 10 billion turnover, has been hindered from investing in the power industry. ENRON is willing to produce power which will be consumed at US cents 4.9 per kwh, using their own finding, The company has been denied a memorandum of understanding by the responsible Minister.

ENRON had also offered to produce emergency thermal power of 65 MW to meet the current power shortage in only 4 months but the Minister is adamant despite clearance from the Vice President. It therefore appears that government wants to conclude a PPA with AES for other reasons.

The public should also note that Hon. Kaijuka has denied Kakira Sugar Works a Power Purchase Agreement for 20 MW produced at Kakira from Cane waste. Yet such small IPPs would go along way in initigating our power shortage without any damage to the environment.

Minister exaggerated power export potential

In the article it is reported that Hon. Kaijuka painted a rosy picture of our power exports. He stated that 165 MW and 295 MW would be exported to Kenya by 2004 and 2006 respectively. 100 MW are also to be exported to Tanzania by 2006. According to the official Hydro power Development master plan developed by Kennedy and Donkin, and the Uganda Investment Authority Energy Profile of March 1998, the power export potential of Uganda is Limited. Maximum power export demand to Kenya is projected to reach 80 MW under the high scenario by 2020. Under the same scenario, Tanzania is estimated to import a maximum of 30 MW by 2020. Power exports to Rwanda will be only 20 MW by that data. Total exports are therefore projected at only 130 MW by 2020 from the current 38 MW. Save Bujagali Crusade is therefore questioning the motive behind giving such exaggerated issues to the press.

Power price figures by the Minister and AES differ

The East African quotes the Minister as having said that AES power shall attract a consumer tariff of US cents 5.9 per kwh. The same Minister, in his clarification to parliament on page 5 stated that the maximum consumer tariff will be US cents 12 in current dollar terms. The New Vision of Saturday February 20th 1999, carried an article by Christian Wright, where he gave US cents 4.2 as the cost of power to be produced. Save Bujagali Crusade is wondering why the Minister and Mr. Christian Wright constantly give different prices for the AES power. It is important the Minister gives the actual estimates for power generation and transmission separately.

Urgency of PPA

During the joint meeting of the parliamentary committees on National Economy and Natural resources, the Minister emphasized the urgent need of approving the project. It was reported in the press that government loses a lot of money for each day that passes without approving the project. Christian Wright in an article carried in the New Vision of 20th February 1999, gave his estimates of loses government incurs every extra day that passes without approving the project. Save Bujagali Crusade wish to call upon government and in particular parliament to approve the Karuma falls project urgently. The project has no controversies and NORPAK is ready to embark in the project. They have already assured the nation that all studies have been completed and their power is the cheapest. Kalagala Falls project should be approved since it is the least cost site.

With all the facts available parliament would be unprincipled to approve the AES Nile power project. It will be an indication that government would continue to do wrong things despite information and evidence to the contrary.

This country should learn from past experience of doubtful ventures i.e Nile Hotel, Uganda Commercial Bank, HIMA and SWIPCO.

This is the fifth in a series of papers the Save Bujagali Crusade is writing to sensitise political leaders, Civil society, NGOs and the entire public on the negative effects of destroying Bujagali Falls.