Ugandan High Court to Consider Releasing Key Document on Dam Project

26 July 2002

The Ugandan High Court will listen to arguments Aug. 22 to decide whether a contract document for the proposed Bujagali Dam should be released to the public.

Neither the Ugandan government, nor the dam project’s sponsor, AES Nile Power, a subsidiary of AES Corp. of Arlington, Va., have previously refused to release the Power Purchase Agreement (PPA), a contract between AES and Uganda containing details that dam critics are eager to see.

Following a lawsuit filed by Greenwatch, a Ugandan NGO, the government was ordered to provide the agreement to the court by July 19 so it could evaluate the constitutionality of its privacy.

In the suit, Greenwatch alleges that failing to release the agreement violates Article 41 of the Ugandan Constitution, which states that citizens have the right to information from the government unless the release of the information will threaten national security or the privacy of another party.

Kenneth Kakuru, the attorney representing Greenwatch, does not feel the contract falls under these exceptions.

“We do not feel the PPA has in any way anything to do with State security of privacy of an individual,” Kakuru said. “The release will mean the ordinary citizen can now access information … and therefore be better informed.”

AES said it will abide by the outcome of the case. “The release of the document depends on the other party’s preference,” said Christian Wright, former Country Director for AES Nile Power. “We believe in transparency…we respect whatever interpretation of Ugandan law the court decides on.”

Details of Project in Undisclosed Document

According to several NGOs, the PPA requires the Ugandan government to pay AES $100 million per year for 30 years, regardless of how much power is actually generated and sold. Problems with the hydrology of the river that could cause drought, or the inability of Ugandan citizens, only 3 percent of whom have access to the Ugandan power grid, to purchase the electricity have NGOs wondering if Uganda will be able to meet the financial requirements of the contract.

“The document shows how much of a risk tax payers are taking,” said Lori Pottinger, director of Africa Programs at International Rivers Network (IRN). “We think it will rake Ugandans over the coals.”

AES disagreed. “The power produced should be some of the least expensive in the region. It was reviewed by Parliament and it was deemed okay,” Wright said.

Allegedly, the contract does allow for some type of deferred payments in case of an emergency. “Our understanding is that when flow levels of the river fall below a certain level, the payments are deferred, but at a large interest rate,” said Graham Saul, Project Manager at Bank Information Center. Reports of the rate vary from 13 percent to 18 percent.

World Bank Criticized for Lack of Transparency

NGOs are not alone in wanting the release of the PPA. The World Bank’s own Independent Review Board, a three-member panel created to ensure Bank accountability in policies and procedures, called for the release of the document in a report submitted to the Board of Directors on May 30. The Independent Review Board said that although not releasing the PPA was not a direct violation of the World Bank’s disclosure policy, its release is “vital” for public understanding of the project.

Although the World Bank, through its International Finance Corporation (IFC) and International Development Association (IDA) approved loans and guarantees for the project in December 2001, it is currently on hold following the release of the Inspection Panel Report and accusations of corruption. A report on the allegations can be found in a July 3 Wall Street Journal article.

The accusations involve an alleged bribe given by an AES official to the former Ugandan Minister of Energy, who is currently Alternate Executive Director for Eastern and Southern Africa at World Bank headquarters in Washington. He has denied the charges.

“The Bank found something not quite right and the project is on hold pending further investigation,” said a source at World Bank.

The Bujagali Hydropower Project is a proposed 200 megawatt, $550 million dam to be located at Bujagli Falls on the Nile River that would allegedly double Uganda’s grid-based electricity supply and boost the economy. In contrast, the Independent Review Panel found the World Bank’s economic analysis to be lacking on several issues, and suggested improvements. The Bank refuted the claims of any shortcomings, but because the official Economic Review has not been released, nothing can be verified.

This refusal by the Bank to release the Economic Review of Bujagali to the public is a direct violation of the Bank’s Disclosure Policy, according to the Inspection Panel. Breaking the policy, IFC signed an agreement with project sponsor AES affirming that this information would not be disclosed. According to Bank Management, the IFC does not release information that is “confidential” or could “compromise government/Bank interactions.”

AES denied any knowledge of this contract. “I’m not aware of any agreement on those lines. My understanding is that was never done,” said Wright.

The Panel also found a total lack of transparency in the Bank’s failure to prepare a Sectoral Environmental Assesment (SEA) of the project, required “when the project is likely to have sectoral or regional impacts.” In its response to the Inspection Panel Report, the Bank proposed creating an SEA as part of dam planning to be used for future projects, rather than before construction begins. International Rivers Network opposed this idea in a review of the Bank’s response to the Inspection Panel Review, insisting that an SEA should be prepared as part of the planning process.

If the Ugandan Court forces the government to release the PPA, Kakuru expects it to have broad effects on all transparency issues.

“The release means that many agreements made in the interest of the public, especially the sale of public enterprises can now be made public,” he said. “The people will be in a better position to hold their government accountable.”

By Robin Brand

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Filed under: IFTI Watch


In this column, Washington, D.C.-based journalist Toby J. McIntosh reports on the latest developments in information disclosure in International Financial and Trade Institutions (IFTI).
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