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BLUE REVOLUTION INITIATIVE
BUJAGALI DAM ENVIRONMENTAL MITIGATION ASSESSMENT
AUGUST 2007
This publication was produced for review by the United States Agency for International
Development. It was prepared by the Blue Revolution Initiative.
COLLABORATING ENTITIES
DAI (Prime Contractor) Subcontractors
Academy for Educational Development Aiken Global Environmental Services, LLG AISDevelopment, LLC CDM International, Inc. CDR Associates Duke University ECO Consult (Jordan) Emerging Markets Group Environmental Quality International (Egypt) Hatch Mott MacDonald Institute for Public-Private Partnerships International Development Enterprises International Executive Service Corps The Media Network, Inc. Metropolitan Consulting Corporation Riverside Technology, inc. SETS (Lebanon) Social Impact TCG International, LLC Texas Universities Partnership Training Resources Group, Inc. ValuAdd Management Services Resource Organizations
Center for Conflict Resolution (Uganda) Dolsar Engineering Limited (Turkey) Hydro Yemen (Yemen) International Society for Development in the Euphrates and Tigris Region (Iraq) MASCA (Morocco) Oregon State University Overseas for Sustainable Development (Jordan) Resource Mobilization Advisors Water Environment Federation (WEF) Yilma Global Consult (Ethiopia)
BLUE REVOLUTION INITIATIVE
BUJAGALI DAM ENVIRONMENTAL MITIGATION ASSESSMENT
PREPARATION
Armando Balloffet
Riverside Technology, inc.
DISCLAIMER
The authors’ views expressed in this publication do not necessarily reflect the
views of the United States Agency for International Development or the
United States Government.
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CONTENTS
List of Acronyms and Abbreviations .............................................................................. iii
1 Executive Summary ......................................................................................... 1
1.1 Background ............................................................................................................................... 1
1.2 The Bujagali Hydropower Project ........................................................................................ 1
1.3 Environmental Management for the Bujagali Hydropower Project .......................... 2
1.4 Non-Governmental Organizations and Bujagali............................................................. 2
1.5 USAID’s Interest in the Bujagali Project............................................................................... 3
1.6 Recommended Principal USAID Bujagali Project Activities ......................................... 4
1.6.1 Support the Project Monitoring Committee Activity...................................................... 4
1.6.2 Water Quality and Fisheries Monitoring and Mitigation Activity................................. 4
1.6.3 Reforestation Support Activity .............................................................................................. 5
1.6.4 Mabira Forest Management Activity ................................................................................. 5
1.7 Indicative Program Budget ................................................................................................... 6
2 Project Objective and Approach................................................................... 8
3 Background .................................................................................................... 10
3.1 Energy Situation in Uganda ................................................................................................. 10
3.2 The Bujagali Hydropower Project ...................................................................................... 10
3.2.1 Project Description................................................................................................................. 10
3.2.2 Environmental Management ............................................................................................. 11
3.3 Non-Governmental Organizations and Bujagali........................................................... 12
3.3.1 Ugandan Concerned NGOs............................................................................................... 12
3.3.2 World Bank Inspection Panel .............................................................................................. 13
3.3.3 World Commission on Dams and the Uganda Dams Dialogue ............................... 14
3.4 USAID’s Interest in the Bujagali Project............................................................................. 15
4 Recommended Statement of Work ............................................................. 17
4.1 Preparatory Activities and Information Gathering ....................................................... 17
4.2 In-Country Activities............................................................................................................... 17
4.2.1 Familiarization with Uganda Situation and the BHP ..................................................... 17
4.2.2 Support the Project Monitoring Committee Activity.................................................... 18
4.2.3 Water Quality and Fisheries Monitoring and Mitigation Activity............................... 19
4.2.4 Reforestation Support Activity ............................................................................................ 22
4.2.5 Mabira Forest Management Activity ............................................................................... 25
4.3 Timing and Project Duration................................................................................................ 26
4.4 Indicative Program Budget ................................................................................................. 27
4.5 Relationships and Responsibilities ...................................................................................... 27
4.6 Deliverables ............................................................................................................................. 27
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4.7 Acceptance Criteria ............................................................................................................. 29
4.8 Staffing ...................................................................................................................................... 29
ANNEXES ...................................................................................................................... 31
List of Persons Met....................................................................................................................... 33
Recommendation for Procurement ........................................................................................ 37
Indicative Budget ....................................................................................................................... 39
Consultant Work Activities......................................................................................................... 41
Map of Bujagali Dam................................................................................................................. 60
Excerpt of the Social and Environmental Management Plan ............................................. 62
World Bank PID............................................................................................................................ 64
Excerpt from the Bujagali Hydropower Project, Social and Environmental Assessment Main Report: BEL’s SEAP Commitments................................................................................... 79
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List of Acronyms and Abbreviations
AES NP AES Nile Power (former Bujagali developer)
AFD Agence Française de Développement - French Development Agency
AfDB African Development Bank
AGCI African Global Competitiveness Initiative, USAID
AGOA African Growth and Opportunity Act signed into law on May 18, 2000
AKFED Aga Khan Fund for Economic Development
BEL Bujagali Energy Limited
BHP Bujagali Hydropower Project
CDM Clean Development Mechanism
CRMU Compliance Review and Mediation Unit (AfDB)
DNA Designated National Authority
EIB European Investment Bank
EPC Engineer, Procure and Construct
GoU Government of Uganda
GWh Gigawatt-hours
IP Inspection Panel (World Bank)
IRN International Rivers Network
IUCN The World Conservation Union
kWh Kilowatt-hours
MEO USAID/Uganda Mission Environmental Officer
MW Megawatt
NAFIRRI National Fisheries Resources Research Institute
NAPE National Association of Environmental Professionals
NEMA National Environmental Management Authority
NFA National Forestry Authority
NGO Non-Governmental Organization
SEA Social and Environmental Assessment
SEAP Social and Environmental Action Plan
UDD Uganda Dams Dialogue
UETCL Uganda Electricity Transmission Company Limited
USAID United States Agency for International Development
WCD World Commission on Dams
WWF World Wildlife Fund
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1 EXECUTIVE SUMMARY
1.1 Background
Despite recent progress in poverty reduction and strong economic growth, Uganda remains one of the poorest countries in the world, with a per capita income of around US$ 300 per year and 31 percent of the population living below the poverty line. The rapid demographic growth of the country is stressing the available infrastructure, and without improvements, it will be difficult to reduce poverty. In particular, Uganda is experiencing a crisis in the supply of electricity due to delays in developing long-term infrastructure solutions and increasing demand. Constraints to service expansion include political, commercial, and technical issues, and the lack of adequate power generation capacity. The primary power source in Uganda is the hydroelectric facility at Owens Falls (the Nalubaale and Kiira 380MW dam complex), located at the mouth of Lake Victoria and source of the Nile River. Firm hydropower output from this complex was reduced from an average of about 270MW as of the end of 2005, to around 120MW in August 2006 because of low Lake Victoria water levels, falling well short of the current system demand of about 380MW at peak times and about 290MW at base load. The resulting power outages are a deterrent to economic growth and the well being of the population.
The GoU has addressed this shortfall through the purchase of package plants and other means relying on thermal power generation, primarily using imported oil. This has had a profound negative impact on the cost of production and tariffs. The proposed Bujagali Hydropower Project (BHP) will reuse the water that has been evacuated from Nalubaale and Kiira, thereby allowing Uganda to produce more than twice as much power with the same water releases as it would generate with the existing station alone. When commissioned in 2011, BHP would immediately displace at least 738 GWh of diesel generation and allow significantly reduced tariffs and emissions.
1.2 The Bujagali Hydropower Project
The Bujagali Hydropower Project (BHP) is a 250-megawatt power-generating facility proposed for the Victoria Nile River near the Town of Jinja, in Uganda (see map in Annex E). An associated power transmission system, the Bujagali Interconnection Project, is a separate proposed project sponsored by Uganda Electricity Transmission Company Limited (UETCL) that will distribute the hydro electricity to the Ugandan power grid. The proposed project is being developed by Bujagali Energy Limited (“BEL”), a special purpose company incorporated under the laws of Uganda. The Project Sponsors are: (a) Industrial Promotion Services (Kenya) Ltd. (IPS(K)), the Kenya subsidiary of IPS, the industrial development arm of the Aga Khan Fund for Economic Development (AKFED); and (b) Sithe Global Power LLC (US) (Sithe Global), an international development company. The EPC contractor is a consortium formed by Salini SpA (Italy) and Alstom Power Hydraulique (France) who were selected following a competitive tender under the European Investment Bank’s (EIB) procurement guidelines. The operations and maintenance (“O&M”) operator of the plant will be an affiliate company of Sithe Global. BEL will also manage the construction of approximately 100 kilometers of 132 kV transmission line, substations, and related works
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on behalf of UETCL. Bujagali construction is expected to start in June 2007 and end by the end of 2010, at which time the plant will be in full service. The project has been approved by the Government of Uganda (GoU) and the World Bank, after a long process of technical, economic, and environmental evaluations.
1.3 Environmental Management for the Bujagali Hydropower Project
It is anticipated that potential environmental and social impacts will be mitigated to a less-than-significant level through a comprehensive Social and Environmental Action Plan (SEAP). The SEAP adopted with the SEA is an umbrella procedure that covers numerous action plans. At this point the SEAP is in draft form, and outlines social and environmental management policies and systems; mitigation plans, procedures, and programs; monitoring activities; implementation schedules and cost estimates; and, plans for integrating the SEAP within the overall development plan for the project.
BEL has committed to developing a more detailed final SEAP to carry out the following general mitigation measures:
• Providing alternative water supplies (groundwater wells, etc.) for villages with restricted access to the river
• Planting native vegetation on islands and riverbanks in the new Bujagali reservoir
• Monitoring water quality during and after construction
• Monitoring of fish stocks in the new reservoir and the downstream river, and the re-stocking of native fish species, if necessary
• Environmental measures -- e.g., enrichment planting of forest reserves and islands -- and tourism amenities at the downstream Kalagala Falls site
• Providing alternative raft launching and exit facilities for white water rafting enterprises
• Developing new tourism facilities in the Bujagali area (cultural heritage facilities, dam visitor’s center, picnic site, etc.)
• Establishing traffic management, environmental monitoring, and management programs to minimize the effects of construction.
• Considering additional public and private initiatives designed to protect the Kalagala Falls reserve.
1.4 Non-Governmental Organizations and Bujagali
The Bujagali Project has been the subject of international and Ugandan NGO scrutiny for a long time. Some of these organizations have demonstrated that they are in opposition to dams in any form. Others, like the National Association of Environmental Professionals (NAPE) appear to be concerned about specific aspects or components of the project. In meetings with USAID, a group of NGOs in Kampala recently presented a series of issues that remained “unresolved” even after the completion of the SEA and public participation programs. NAPE went on to tell USAID that everyone in Uganda agrees that there is a need for more electricity, but that other alternatives have not been adequately considered.
The World Bank has an Inspection Panel (IP) whose primary purpose is to address the concerns of the people who may be affected by Bank projects and to ensure that the Bank adheres to its operational policies and procedures during the design, preparation
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and implementation phases of its projects. On July 27, 2001, the Inspection Panel was requested by NAPE and the Save the Bujagali Crusade (SBC), as well as other local organizations and individuals to review the Bujagali project as it was then conceived. The findings and recommendations of the IP and management response resulted in the development of a strategic/sectoral environmental assessment, strengthened commitments to the Kalagala Offset reflected in the Indemnity Agreement, an investigation of power generation alternatives, a review and strengthening of the community development action plans and resettlement plan, and other measures. NAPE has again requested the IP to become involved in the current Bujagali project, and the IP has agreed to review the project. Similarly, NAPE requested a review by the Compliance Review and Mediation Unit (CRMU) of the AfDB, and this has been accepted. The reviews are likely to take several months or more to complete. They are not expected to impact the schedule of the project, but recommendations or management actions may require adjustments to the SEAP.
The World Commission on Dams core values were stated as: equity, efficiency, participatory decision-making, sustainability, and accountability. To achieve these goals they proposed seven strategies, including ensuring compliance with all commitments made for the planning, implementation and operation of dams. The Uganda Dams Dialogue discussed the WCD and presented a number of findings and recommendations in its 2006 report, including the following: “4. Support Government and convene forums for promoting Stakeholders participation in identification, planning, implementation, monitoring, and evaluation of dam development projects.” The establishment by GoU (NEMA) of an independent Project Monitoring Committee will help address the monitoring aspects of this recommendation for the BHP.
1.5 USAID’s Interest in the Bujagali Project
USAID’s African Global Competitiveness Initiative (AGCI) builds sub-Saharan Africa’s capacity for trade and competitiveness. AGCI will provide $200 million of additional resources over five years to expand African trade with the United States under the African Growth and Opportunity Act signed into law on May 18, 2000 (AGOA), with other international trading partners, and regionally within Africa; and to promote the export competitiveness of African countries. USAID believes that a sustainable and reliable energy supply is vital for economic growth and poverty reduction, and intends to facilitate the BHP infrastructure development. In view of the importance of obtaining public understanding and acceptance of the SEAP process for the BHP, and in support of the WCD’s strategy for ensuring compliance by government and developer with their commitments, USAID will provide support to the monitoring and mitigation program for the project, particularly with regard to supporting a project monitoring committee, monitoring water quality and fisheries, and reforestation.
USAID intends to support the environmental monitoring and mitigation program for the BHP through the four principal activities discussed in the following sections. To define the USAID activities and approach, a mission was fielded to Uganda consisting of senior USAID officers from Washington and Kampala, and an international Consultant who was responsible for developing the recommended Statement of Work to support the future environmental monitoring and mitigation activities presented in Chapter 4.0.
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1.6 Recommended Principal USAID Bujagali Project Activities
The detailed Recommended Statement of Work presented in Chapter 4.0 of this document proposes a number of activities to be carried out over the approximately three-year term of the Contract. These include preparatory and reporting activities to gather information and coordinate the effort with USAID. The principal activities leading to specific deliverables are discussed in the following sections.
1.6.1 Support the Project Monitoring Committee Activity
The National Environmental Management Agency (NEMA) has approved the project with a number of conditions, including the establishment of a Project Monitoring Committee (PMC) that includes representatives from government, civil society, and other stakeholders, and that will ensure that environmental and social mitigations, agreed to in the SEA and SEAP are complied with. Although the ultimate responsibility for environmental management for the enterprise rests with BEL, they have stated that many day-to-day activities of the SEAP will be “devolved” to the Construction Contractor and others. Detailed, implementable activities and procedures for each of the players have yet to be developed and will require concurrence by and others. Moreover, changing circumstances will undoubtedly result in changed or unforeseen conditions affecting the SEAP. The PMC will carry out an important oversight function in this regard, and will provide recommendations to GoU and the funding agencies for acceptance, denial, or modification of proposed amendments or clarifications of the Action Plans, including the umbrella SEAP. The USAID Contractor will be responsible for the technical evaluation of the proposed Action Plans or their modifications during the term of the USAID Contract, reporting their findings to the PMC.
The Contractor will provide support to the committee to ensure that it has the capacity and capability to impartially assess ongoing SEAP implementation, recommend corrective actions, carry out a transparent public and stakeholder dialogue, and report to the GoU and the funding agencies on the status of environmental and social safeguards. Should corrective actions be required, or should certain mitigation measures be required that were not anticipated and agreed to by BEL or GoU, the USAID Contractor will develop a succinct set of operational procedures for accessing USAID or seeking other available funds to carry out these actions. This would include identifying appropriate contracting or procurement mechanisms for the necessary actions, with USAID concurrence.
1.6.2 Water Quality and Fisheries Monitoring and Mitigation Activity
The SEA presents a relatively benign picture of expected water-related impacts and there is a concern that some of the baseline monitoring that is needed to establish the status of issues such as the presence of endangered species or the need for future re-stocking of fish in the reservoir area has not given conclusive answers. The USAID Contractor will develop and implement a water quality and fisheries monitoring plan that uses as a starting point the information gathered during earlier Bujagali Project development studies in 2001 and 2002, and the limited baseline monitoring completed for the current SEA. An important source of information and technical knowledge on fisheries and aquatic ecosystems is the National Fisheries Resources Research Institute (NAFIRRI), based in Jinja, Uganda. This organization is already involved in a cooperative agreement with USAID through Auburn University. It is anticipated that the USAID
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Contractor will coordinate its fisheries monitoring work with NAFIRRI. It is possible that the Auburn-NAFIRRI arrangement could be modified by USAID to include providing support or research services if needed to the BHP project, under the overall supervision of the PMC and the USAID Contractor.
In addition to the monitoring program discussed above, the USAID Contractor will coordinate with the BEL Environment Manager, the PMC, NAFIRRI, and local stakeholders to develop and implement an enhanced, sustainable water quality and fisheries program for the impacted areas. This will entail ensuring that the BEL commitments are met and that additional activities identified in this planning process (if necessary) are implemented under the USAID program.
1.6.3 Reforestation Support Activity
The SEAP provides for the support to reforestation activities in the Kalagala Offset area and along the banks of the Nile downstream of the Bujagali dam. The main purpose of this activity is to develop and implement an enhanced, sustainable plan for reforestation that includes the BEL SEAP commitments, uses input from affected stakeholders in the impacted area, and coordinates with NFA’s programs. Reforestation is labor-intensive and can be costly. To be successful, it is necessary to have clear goals and objectives regarding the project and how it will tie in to the needs of the nearby communities. The Contractor will develop and implement a plan that will, at a minimum include consultation with the National Forestry Authority (NFA) regarding the project; clarification of land ownership and permitted uses in the areas being considered for reforestation; consultation with the affected communities to ascertain their needs and attitudes toward reforestation; consultation with other stakeholders, such as environmental groups or eco-tourism operators regarding the goals of the reforestation programs; design of an appropriate detailed program for each of the areas to be forested, including a definition and bounding of the areas to be reforested, schedules and a list of needed funding, resources, and anticipated labor and other inputs; provide operational and institutional advice and support to communities carrying out the reforestation; investigate the possible application of CDM to the BHP program and in particular the reforestation. If promising, consult with the relevant Ugandan authorities to establish a process for incorporating this to the program; and, monitor the program and report to the PMC.
1.6.4 Mabira Forest Management Activity
Reforestation is only one method of the restoration of wise and sustainable use of land resources. In many cases, it is better to ensure the conservation and adequate management of existing forests, particularly natural ones. In the case of the Mabira Central Forest Reserve, there is expected to be approximately 70 ha of forest impacted by the construction of the transmission lines from Bujagali. The new line will parallel an existing corridor through the reserve, so the new line right of way will not be the first through the reserve. An agreement has been reached between the developers and the NFA to enhance the management of the Mabira reserve as mitigation for the impact. NFA recognizes that said that there is a need for a mitigation and management plan for Mabira forest reserve, and that this is a recommendation of the SEA. In cooperation with NFA, BEL, and other stakeholders, the Contractor will develop a Mabira Forest Management Plan.
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1.7 Indicative Program Budget
The direct costs associated with implementation of the project over three years are estimated to be: Activity 1: US$360,000; Activity 2: US$225,000; Activity 3: US$450,000; Activity 4: US$225,000. These are indicative program implementation costs only, and do not include the Consultant’s personnel or other direct costs. These are estimated at US$1,246,000, as itemized in Annex C, for a total of US$2,686,000 over three years..
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2 PROJECT OBJECTIVE AND APPROACH
The objective of the USAID Bujagali Project is to support the environmental monitoring and mitigation program for the Bujagali Hydropower Project (BHP) through four activities: (1) provide operational and technical assistance to a Bujagali Project Monitoring Committee to be convened by the Government of Uganda (GoU); (2) monitor water quality and fisheries in the affected area and develop and support an appropriate mitigation program; (3) support the reforestation efforts proposed for the Bujagali dam and the Kalagala offset; and, (4) develop a Mabira Forest Management Plan and support the mitigation program for impacts of the transmission lines to the Mabira Forest reserve.
To define the proposed USAID activities and approach, a mission was fielded to Uganda consisting of senior USAID officers from Washington and Kampala, and an international environmental Consultant. The Consultant met with a number of interested parties (Annex A), developed the Statement of Work presented in Chapter 4, recommended a procurement approach (Annex B), produced an estimate of the budget required to carry out the work (Annex C), and carried out other activities. A detailed account of the Consultant’s efforts during the mission, including meeting minutes and a field trip report, can be found in Annex D.
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3 BACKGROUND
3.1 Energy Situation in Uganda
Despite recent progress in poverty reduction and strong economic growth, Uganda remains one of the poorest countries in the world, with a per capita income of around US$ 300 per year and 31 percent of the population living below the poverty line. The rapid demographic growth of the country is stressing the available infrastructure, and without improvements, it will be difficult to reduce poverty. In particular, Uganda is experiencing a crisis in the supply of electricity due to delays in developing long-term infrastructure solutions and increasing demand. Uganda has one of the lowest rates of per capita energy consumption in the world, with only 5 percent of the population on the grid. Constraints to service expansion include political, commercial, and technical issues, and the lack of adequate power generation capacity.
The primary power source in Uganda is the hydroelectric facility at Owens Falls (the Nalubaale and Kiira 380MW dam complex), located at the mouth of Lake Victoria and source of the Nile River. Firm hydropower output from this complex was reduced from an average of about 270MW as of the end of 2005, to around 120MW in August 2006 because of low Lake Victoria water levels, falling well short of the current system demand of about 380MW at peak times and about 290MW at base load. The resulting power outages are a deterrent to economic growth and the well being of the population.
The GoU has addressed this shortfall through the purchase of package plants and other means relying on thermal power generation, primarily using imported oil. This has had a profound negative impact on the cost of production and tariffs and is producing an estimated 250 times more greenhouse gases per unit of electricity produced than the Bujagali project would1. The BHP will reuse the water that has been evacuated from Nalubaale and Kiira, thereby allowing Uganda to produce more than twice as much power with the same water releases as it would generate with the existing station alone. When commissioned in 2011, BHP would immediately displace at least 738 GWh of diesel generation and allow reduced tariffs from their current level of around US$ 0.17 per kWh.
3.2 The Bujagali Hydropower Project
3.2.1 Project Description
The Bujagali Hydropower Project is a 250-megawatt power-generating facility proposed for the Victoria Nile River near the Town of Jinja, in Uganda2. An associated power transmission system, the Bujagali Interconnection Project, is a separate proposed project sponsored by Uganda Electricity Transmission Company Limited (UETCL) that will distribute the hydro electricity to the Ugandan power grid. The proposed project is
1 “Bujagali Hydropower Project - Social and Environmental Assessment Report - Executive Summary” R.J. Burnside International Limited for BEL, December 2006.
2 See location map in Annex 1
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being developed by Bujagali Energy Limited (“BEL”), a special purpose company incorporated under the laws of Uganda. The Project Sponsors are: (a) Industrial Promotion Services (Kenya) Ltd. (IPS(K)), the Kenya subsidiary of IPS, the industrial development arm of the Aga Khan Fund for Economic Development (AKFED); and (b) Sithe Global Power LLC (US) (Sithe Global), an international development company. The EPC contractor is a consortium formed by Salini SpA (Italy) and Alstom Power Hydraulique (France) who were selected following a competitive tender under the European Investment Bank’s (EIB) procurement guidelines. The operations and maintenance (“O&M”) operator of the plant will be an affiliate company of Sithe Global. BEL will also manage the construction of approximately 100 kilometers of 132 kV transmission line, substations, and related works on behalf of UETCL. Bujagali construction is expected to start in June 2007 and end by the end of 2010, at which time the plant will be in full service3. The project has been approved by the Government of Uganda (GoU) and the World Bank, after a long process of technical, economic, and environmental evaluations.
3.2.2 Environmental Management
The Bujagali dam will cause the regime of a free flowing river to change significantly in the project area. This could have short- to long-term impacts on the fisheries, water-borne diseases, and general quality of water. Base levels for this have been established as part of the Bujagali preparatory environmental and social studies. A program is needed that continues to monitor and implement corrective and management mechanisms. This will require expert advice, working with local NGOs, and providing funding for corrective and management mechanisms.
The protection of the levels of Lake Victoria is important for the social, environmental, and economic interests of all countries in the region. There is a need to coordinate on the Lake Victoria Environmental Management Project. In addition, it will be critical that the GoU and BEL implement careful monitoring and reporting of the environmental and social impacts and mitigation measures during project construction and operation, with mechanisms for corrective action as necessary. The project developers need to collect baseline information about endangered fish in the project area, as the dam may impact at least one critically endangered, and two endangered fish species (IUCN Red List).
An additional 200-300 hectares of Forest Reserves adjoining Bujagali are in a highly deforested state. Reforestation of this could greatly improve the local eco-system and water recharge of the Nile to offset some of the impacts from the disruption of the flow of the Nile by the project. It is understood that much of the expenditures for the project will be largely local labor and nursery-related expenditure. BEL has undertaken to
3 Details can be found at http://www.bujagali-energy.com. See also the following links for World Bank Appraisal
Document and Information sheet: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/04/11/000020953_20070411110509/Rendered/PDF/384210UG0IDAR20071007311.pdf; and,
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/03/26/000021271_20070327160103/Rendered/PDF/BujaProject0In1aisal0Stage312612007.pdf
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reforest 170 hectares. In addition, French Development Agency – AFD – has agreed fund the reforestation of an additional 400 hectares of riverbanks near Bujagali.
It is anticipated that potential environmental and social impacts will be mitigated to a less-than-significant level through a comprehensive Social and Environmental Action Plan (SEAP)4. At this point the SEAP is in draft form, and outlines the following:
• Social and environmental management policies and systems;
• Mitigation plans, procedures, and programs;
• Monitoring activities;
• Implementation schedules and cost estimates; and,
• Plans for integrating the SEAP within the overall development plan for the project.
The SEAP adopted with the SEA is an umbrella procedure that covers numerous action plans, as illustrated on the figure reproduced in Annex F, found in the SEA Executive Summary.
BEL has committed to developing a more detailed final SEAP to carry out the following general mitigation measures:
• Providing alternative water supplies (groundwater wells, etc.) for villages with restricted access to the river
• Planting native vegetation on islands and riverbanks in the new Bujagali reservoir
• Monitoring water quality during and after construction
• Monitoring of fish stocks in the new reservoir and the downstream river, and the re-stocking of native fish species, if necessary
• Environmental measures -- e.g., enrichment planting of forest reserves and islands -- and tourism amenities at the downstream Kalagala Falls site
• Providing alternative raft launching and exit facilities for white water rafting enterprises
• Developing new tourism facilities in the Bujagali area (cultural heritage facilities, dam visitor’s center, picnic site, etc.)
• Establishing traffic management, environmental monitoring, and management programs to minimize the effects of construction.
• Considering additional public and private initiatives designed to protect the Kalagala Falls reserve.
A detailed table showing Impact Mitigation, Net Effects Analysis, and Effects Monitoring Activities committed to by BEL is in Annex H.
3.3 Non-Governmental Organizations and Bujagali
3.3.1 Ugandan Concerned NGOs
The Bujagali Project has been the subject of international and Ugandan NGO scrutiny for a long time. Some of these organizations have demonstrated that they are in opposition to dams in any form. Others, like the National Association of Environmental
4 For more details, see “Bujagali Hydropower Project - Social and Environmental Assessment Report” R.J. Burnside International Limited for BEL, December 2006 found at http://www.bujagali-energy.com
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Professionals (NAPE) appear to be concerned about specific aspects or components of the project. In meetings with USAID, a group of NGOs in Kampala recently presented a series of issues that remained “unresolved” even after the completion of the SEA and public participation programs. These perceived problems include:
• Concerns about the hydrology used for the analysis and design. NGOs indicate that available water is likely for no more than 120-130 MW as opposed to the 250MW capacity of the proposed facility;
• Cost and affordability: according to the NGOs, the project is now at $860 million, and the tariffs were unaffordable when the project cost was around $550 million;
• Mabira Forest Reserve. NAPE and many others are angry about the government attempt to give away a portion of the Mabira forest reserve to sugar cane producers. Demonstrations against this action resulted in two deaths. It is not clear how this specifically related to Bujagali, other than a general distrust of the government’s commitment to the forest;
• Global warming issues are not properly addressed;
• Cultural beliefs of the adjoining Basoga and Buganda peoples are not being taken seriously. The attempt to transfer the Bujagali spirits from Bujagali to Kalagala was a concern because the two spirits were incompatible, in the belief of the locals;
• Tourism potential is not being given enough support. “Tourism there is more important than power”;
• There are no binding or credible commitments from the government to protect Kalagala in perpetuity;
• The resettlement village houses were poorly built five years ago and are already showing cracks;
• Land titles for the resettlement plots have not been given yet;
• The transmission line goes through some wetlands in order to avoid villages. Concern was expressed about the impact to the wetlands of the towers, but it is not clear if the NGOs were proposing going through the villages instead;
• A dam safety study is needed, particularly for the Owens Falls dam.
NAPE went on to tell USAID that everyone in Uganda agrees that there is a need for more electricity, but that other alternatives have not been considered, such as Karuma that have fewer impacts and have a larger catchment area to improve the water reliability. Others in the meeting indicated that the next 30-50 years will most likely see a “low hydrology” scenario, so it would be best to go to Karuma where Lake Kyoga has a more stable supply than Lake Victoria.
3.3.2 World Bank Inspection Panel
The World Bank has an Inspection Panel (IP) whose primary purpose is to address the concerns of the people who may be affected by Bank projects and to ensure that the Bank adheres to its operational policies and procedures during the design, preparation and implementation phases of its projects. On July 27, 2001, the Inspection Panel was requested by NAPE and the Save the Bujagali Crusade (SBC), as well as other local organizations and individuals to review the Bujagali project as it was then conceived. The Inspection Panel accepted the request, carried out its work, and distributed its Investigation Report on May 29, 2002. On June 7, 2002, the World Bank distributed its
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“Management Report and Recommendation in Response to the Inspection Panel Investigation Report” for consideration by World Bank Executive Directors on June 17, 2002. The findings and recommendations of the IP and management response resulted in the development of a strategic/sectoral environmental assessment, strengthened commitments to the Kalagala Offset reflected in the Indemnity Agreement, an investigation of power generation alternatives, a review and strengthening of the community development action plans and resettlement plan, and other measures5.
NAPE has again requested the IP to become involved in the current Bujagali project, and the IP has agreed to review the project. Similarly, NAPE requested a review by the Compliance Review and Mediation Unit (CRMU) of the AfDB, and this has been accepted. The reviews are likely to take several months or more to complete. They are not expected to impact the schedule of the project, but recommendations or management actions may require adjustments to the SEAP.
3.3.3 World Commission on Dams and the Uganda Dams Dialogue
The World Commission on Dams was convened in 1998 with the task of reviewing the development effectiveness of large dams and assessing alternatives, and developing internationally-acceptable criteria, guidelines and standards for the planning, design, appraisal, construction, operation, monitoring and decommissioning of large dams6. The WCD core values were: equity, efficiency, participatory decision-making, sustainability, and accountability. To achieve these goals they proposed seven strategies:
1. Gaining Public Acceptance
2. Comprehensive Options Assessment
3. Addressing Existing Dams
4. Sustaining Rivers and Livelihoods
5. Recognizing Entitlements and Sharing Benefits
6. Ensuring Compliance
7. Sharing Rivers for Peace, Development and Security
All of these strategies have come into play in the development of the BHP and the proposed SEAP efforts. The sixth strategy, the main focus of this USAID Contract, is further defined by WCD as:
“Ensuring public trust and confidence requires that the governments, developers, regulators and operators meet all commitments made for the planning, implementation and operation of dams. Compliance with applicable regulations, criteria and guidelines, and project-specific negotiated agreements is secured at all critical stages in project planning and implementation. A set of mutually reinforcing incentives and
5 See:
http://web.worldbank.org/WBSITE/EXTERNAL/EXTINSPECTIONPANEL/0,,contentMDK:20228304~pagePK:64129751~piPK:64128378~theSitePK:380794,00.html
6 See Executive summary of WCD report at http://web.worldbank.org/servlets/ECR?contentMDK=20424170&sitePK=336487
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mechanisms is required for social, environmental, and technical measures. These should involve an appropriate mix of regulatory and non-regulatory measures, incorporating incentives and sanctions. Regulatory and compliance frameworks use incentives and sanctions to ensure effectiveness where flexibility is needed to accommodate changing circumstances.”
In Uganda, a forum was launched in 20047 to discuss the WCD report and investigate its application to the Uganda reality. The Uganda Dams Dialogue presented a number of findings and recommendations in its 2006 report, including the following: “4. Support Government and convene forums for promoting Stakeholders participation in identification, planning, implementation, monitoring, and evaluation of dam development projects. Stakeholders shall include: civil society, private sector, dam affected communities, and specialized agencies, among others.” The establishment by GoU (NEMA) of an independent project monitoring committee will help address the monitoring aspects of this recommendation for the BHP.
3.4 USAID’s Interest in the Bujagali Project
USAID’s African Global Competitiveness Initiative (AGCI) builds sub-Saharan Africa’s capacity for trade and competitiveness. AGCI will provide $200 million of additional resources over five years to expand African trade with the United States under the African Growth and Opportunity Act signed into law on May 18, 2000 (AGOA), with other international trading partners, and regionally within Africa; and to promote the export competitiveness of African countries. The AGCI8 has four strategic objectives:
1. Improve the policy, regulatory, and enforcement environment for private sector-led trade and investment;
2. Improve the market knowledge, skills, and abilities of private sector enterprises;
3. Increase access to financial services for trade and investment; and
4. Facilitate investments in infrastructure.
USAID believes that a sustainable and reliable energy supply is vital for economic growth and poverty reduction, and intends to facilitate the BHP infrastructure development. In view of the importance of obtaining public understanding and acceptance of the SEAP process for the BHP, and in support of the WCD’s strategy for ensuring compliance by government and developer with their commitments, USAID will provide support to the monitoring and mitigation program for the project, particularly with regard to supporting a project monitoring committee, monitoring water quality and fisheries, and reforestation.
This statement of work outlines the tasks to be carried out and the expected outcomes of the USAID Bujagali Monitoring and Mitigation Project.
7 “A Scoping Report on Decision Making Processes Regarding Dams and Development in Uganda”, a publication of the Steering Committee of the Uganda Dams Dialogue, November 2006
8 Further details can be found at http://www.usaid.gov/locations/sub-saharan_africa/initiatives/agci.html
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4 RECOMMENDED STATEMENT OF WORK TO
SUPPORT ENVIRONMENTAL MONITORING
AND MITIGATION
This section contains a Recommended Statement of Work that USAID may consider issuing as part of a Request for Proposals for a Contractor to accomplish the proposed USAID Bujagali Project.
The Contractor shall perform the following activities:
4.1 Preparatory Activities and Information Gathering
Prior to traveling to the field, the Contractor Team Leader is expected to:
1. Hold meetings with the Chief, AFR/SD/EGEA (or his designee) in the USAID Washington offices bureau to ensure full understanding of USAID environmental procedures, the roles of the Washington and Kampala offices with respect to the project, and to clarify as necessary the purpose and desired outcomes of this assignment.
2. Gather and get acquainted with existing background information on Uganda such as the country’s energy situation, natural resources, geographical, ecological and biological specificities, current status of environment and biodiversity, institutional organization on entity and state level, key stakeholders and donors in environment and energy, legislation related to the environment, and other relevant information required for the project.
3. Gather and get acquainted with existing information on the BHP, especially the environmental documents prepared by the developers BEL, the earlier environmental documents prepared by the former project developer (AES NP).
4. Meet or speak with key stakeholders or managers at the World Bank and U.S.-based NGOs including the International Rivers Network, World Wildlife Fund, Wildlife Conservation Society, or other organizations involved in hydropower and environment issues in Uganda or relevant regional efforts.
4.2 In-Country Activities
The principal outcome of the Contract will be to enhance the mitigation and monitoring program of the BHP to ensure that the SEAP is observed by all parties. This is to be accomplished through the following main activities.
4.2.1 Familiarization with Uganda Situation and the BHP
The USAID Contractor is expected to become thoroughly familiar with the history and current status of the BHP in Uganda, through review of existing reports (especially the BEL SEA and SEAP), meetings with BEL and other stakeholders, detailed site visits, meetings with local government officials and NGOs concerned about the environment, tourism, energy, or other issues relevant to Bujagali, and through other means as necessary.
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4.2.2 Support the Project Monitoring Committee Activity
The BHP is a complex and controversial project that has been under consideration for over ten years. BEL has appointed an Environment Manager whose responsibilities include the management and implementation oversight of the SEAP. However, many NGOs and others have expressed opposition to the project on many grounds and a lack of trust that the government and the developers will address their concerns.
Although the ultimate responsibility for environmental management for the enterprise rests with BEL, they have stated that many day-to-day activities of the SEAP will be “devolved” to the Construction Contractor and others. Detailed, implementable activities and procedures for each of the Action Plans shown on the figure in Annex F have yet to be developed and will require concurrence by the National Environmental Management Authority (NEMA) and others. Moreover, changing circumstances will undoubtedly result in changed or unforeseen conditions affecting the SEAP. BEL has proposed a “Change Management System …, by which such changes [to Action Plans] will be documented and if necessary, input sought from NEMA and international lenders, prior to being implemented.”9 The Project Monitoring Committee (PMC) will provide an important oversight function in this regard, and will provide recommendations to GoU and the funding agencies for acceptance, denial, or modification of proposed amendments or clarifications of the Action Plans, including the umbrella SEAP. The USAID Contractor will be responsible for the technical evaluation of the proposed Action Plans or their modifications during the term of the USAID Contract, reporting their findings to the PMC.
NEMA has approved the project with a number of conditions, including the establishment of a project monitoring committee that includes representation from government, civil society, and other stakeholders. In addition, all the funding organizations, especially the World Bank and the African Development Bank (AfDB), seek reassurances that the terms of the complex SEAP will be clarified in detail and complied with. This universal desire to ensure compliance with environmental and social mitigations, agreed to in the Social and Environmental Assessment (SEA) and SEAP10 can best be satisfied by the establishment and support for an impartial Project Monitoring Committee (PMC). The Contractor will provide support to the committee to ensure that it has the capacity and capability to impartially assess ongoing SEAP implementation, recommend corrective actions, carry out a transparent public and stakeholder dialogue, and report to the GoU and the funding agencies on the status of environmental and social safeguards.
The Committee is expected to be convened under the auspices of NEMA, but will be an independent entity. Membership in the PMC will be decided by NEMA and could include:
Status / Role Organizations Appointing
Chair National Environmental Management Authority
9 “Bujagali Hydropower Project - Social and Environmental Assessment Report” R.J. Burnside International Limited for BEL, December 2006, Section 8.1
10 See Annex H for a list from the SEA of Impact Mitigation, Net Effects Analysis, and Effects Monitoring Activities
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Member Ministry of Energy and Mineral Development
Member National Forestry Authority
Member Ministry of Water and Environment
Member Ministry of Finance, Planning and Economic Development
Member Local Government (Jinja District?)
Member Environmental NGO
Member Industrial / Business NGO
Member Dam-affected communities
Non-Voting:
Observer World Bank
Observer USAID
Secretary USAID Contractor
As can be seen, an important role is anticipated for the USAID Contractor in providing technical and other needed support to the PMC. In order for the PMC to maintain its “third-party” impartiality, the USAID Contractor will be responsible for facilitating decision-making efforts of the PMC. The following are illustrative of the support functions that the USAID Contractor would provide:
• Develop for approval by the PMC, with USAID review and concurrence, a detailed manual of the role, responsibilities, and activities of the PMC and the USAID Contractor.
• Review and comment on the final SEAP to be developed by BEL
• Review and comment on the SEAPs to be developed by the construction contractor(s)
• Carry out independent reviews or audits of quarterly and annual monitoring results submitted by BEL, and compare to the requirements of the SEAP.
• Advise the PMC on potential agenda items for discussion based on these reports.
• Prepare minutes of PMC meetings, and compile lists of recommendations into PMC action plans for submittals to NEMA, BEL, GoU, funding organizations, or others as appropriate.
• Maintain a record of all mitigation and monitoring activities for the Project.
• Prepare press releases and otherwise support the PMC in public information and involvement
• Prepare and facilitate annual informational one-day workshops open to all interested parties on the progress of the SEAP implementation.
Should corrective actions be required, or should certain mitigation measures be required that were not anticipated and agreed to by BEL or GoU, the USAID Contractor will develop a succinct set of operational procedures for accessing USAID or seeking other available funds to carry out these actions. This would include identifying appropriate contracting or procurement mechanisms for the necessary actions, with USAID concurrence.
4.2.3 Water Quality and Fisheries Monitoring and Mitigation Activity
The Executive Summary of the SEA characterizes expected impacts and mitigation measures related to water quality and aquatic ecosystems as follows:
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“The project is not expected to have any significant long term detrimental impacts on water quality or aquatic life.
During construction, there will in an increase in suspended solids resulting from coffer dam and other construction activities. These effects will be minimized by avoiding disturbance of soils during the clearing activities. Site drainage systems will include sedimentation basins to trap sediments in runoff prior to release to the river. Indigenous aquatic grasses will be planted to control erosion that might occur because of the fluctuating water levels during the initial operation period. In the long term, the banks are expected to stabilize and no significant erosion is expected.
Trees and shrubs will be harvested prior to the reservoir being filled, to minimize water quality effects associated with rotting vegetation, and to prevent fouling of fishing gears.
It is expected that fish stocks will naturally increase in the reservoir compared to the existing condition. For Nile tilapia habitat enhancement will be carried out as part of the quarry and riverbank restoration. Stocking is not expected to be needed.
The abundance of “Haplochromines” fish are also expected to increase as a result of the conversion of faster-flowing habitats to the slower-flowing habitats that are preferred by these species
Entrapment and entrainment of aquatic organisms is not expected to have a significant effect on fish or other populations. Fish screens will be installed on the water intakes reduce the rate of entrainment by fish.
Access points will be provide to the river to ensure there is access to the river by local persons for washing, fishing or other purposes during the construction period.”
Specific mitigation commitments by BEL as presented in the SEA are shown on the following page.
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BEL Mitigation Commitments With Respect to Water Quality and Fisheries
(From SEA Main Report; R.J. Burnside International Limited, December 2006)
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Initial efforts under this activity will be to ensure that the final and latest baseline information has been gathered prior to the start of significant project construction activities.
Although the SEA presents a relatively benign picture of expected water-related impacts there is a concern that some of the baseline monitoring that is needed to establish the status of issues such as the presence of endangered species or the need for future re-stocking of fish in the reservoir area has not given conclusive answers. The USAID Contractor will develop and implement a water quality and fisheries monitoring plan that uses as a starting point the information gathered during earlier Bujagali Project development studies in 2001 and 2002, and the limited baseline monitoring completed for the current SEA. An important source of information and technical knowledge on fisheries and aquatic ecosystems is the National Fisheries Resources Research Institute (NAFIRRI), based in Jinja, Uganda. This organization is already involved in a cooperative agreement with USAID through Auburn University11. It is anticipated that the USAID Contractor will coordinate its fisheries monitoring work with NAFIRRI. It is possible that the Auburn-NAFIRRI arrangement could be modified by USAID to include providing support or research services if needed to the BHP project, under the overall supervision of the PMC and the USAID Contractor.
In addition to the monitoring program discussed above, the USAID Contractor will coordinate with USAID, the BEL Environment Manager, the PMC, NAFIRRI, and local stakeholders to develop an enhanced, sustainable water quality and fisheries program for the impacted areas. This will entail ensuring that the BEL commitments are met and that additional activities identified in this planning process (if necessary) are implemented under the USAID program.
4.2.4 Reforestation Support Activity
The SEAP provides for some support to reforestation activities in the Kalagala Offset area and along the banks of the Nile downstream of the Bujagali dam. Specific mitigation commitments by BEL as presented in the SEA are shown on the following page. The main purpose of this activity is to develop and implement an enhanced, sustainable plan for reforestation that includes the BEL SEAP commitments, uses input from affected stakeholders in the impacted area, and coordinates with NFA’s programs.
Reforestation can provide many benefits, including:
• Direct benefits of shade, commercially-valuable wood, and firewood
• Water quality improvements and reductions in sedimentation and flooding
• Soil improvements including the reduction of erosion potential
• Higher capacity to retain moisture and increased fertility
• Provision of wildlife habitat, although this is probably best done by conserving natural forests.
11 Information on this program is available through USAID- Kampala. See also: http://www.ag.auburn.edu/fish/media/?m=200407
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A reforestation program must be based on an understanding of the physical environment receiving the reforestation (climate, soils, solar radiation, wind, etc.) and the social environment (community attitudes toward forests, apparent deficiencies such as transportation or lack of firewood). In the case of community-based forestry, the Contractor shall help identify, clarify, and prioritize the reasons a community may have to support a particular reforestation program. With this accomplished it will be possible to begin to develop a detailed sustainable reforestation program. The goal should be to develop those products that will be of most use to the concerned communities on a sustainable basis.
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BEL Mitigation Commitments With Respect to Reforestation
(From SEA Main Report; R.J. Burnside International Limited, December 2006)
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Reforestation is labor-intensive and can be costly. To be successful, it is necessary to have clear goals and objectives regarding the project and how it will tie in to the needs of the nearby communities.
The Contractor will develop and implement a plan that will, at a minimum include the following:
• Consultation with the National Forestry Authority (NFA) regarding the project, their perceived role, and their capacity to implement it. In meetings with USAID, the NFA mentioned that at the Kalagala falls there are 104 ha of forest reserves. Adrift (a private rafting company) has 16 ha that they are trying to reforest with indigenous species for ecotourism. NFA is highly flexible in working with communities, and can zone areas as strict reserves, buffer areas, etc. There will be a need to address education in conservation while meeting the needs of the people.
• Clarification of land ownership and permitted uses in the areas being considered for reforestation. Establishing the boundaries of the areas and carrying out surveys. Preparing a GIS-based map of the reforestation areas and environs.
• Consultation with the affected communities to ascertain their needs and attitudes toward reforestation.
• Consultation with other stakeholders, such as environmental groups or eco-tourism operators regarding the goals of the reforestation programs
• Design of an appropriate detailed program for each of the areas to be forested, including a definition and bounding of the areas to be reforested, schedules and a list of needed funding, resources, and anticipated labor and other inputs.
• Provide operational and institutional advice and support to communities carrying out the reforestation.
• Investigate the possible application of CDM to the BHP program and in particular the reforestation. If promising, consult with the Uganda DNA12 to establish a process for incorporating this to the program. As a part of this, the Contractor should investigate the possibility of identifying individual private credit buyers in the US or elsewhere who might be put in touch directly with the local communities.
• Monitor the program and report to the PMC.
4.2.5 Mabira Forest Management Activity
Reforestation is only one method of the restoration of wise and sustainable use of land resources. In many cases, it is better to ensure the conservation and adequate management of existing forests, particularly natural ones. In the case of the Mabira Central Forest Reserve, there is expected to be approximately 70 ha of forest impacted by the construction of the transmission lines from Bujagali. The new line will parallel an existing corridor through the reserve, so the new line right of way will not be the first through the reserve. An agreement has been reached between the developers and the NFA to enhance the management of the Mabira reserve as mitigation for the impact.
12 Believed to be the National Climate Change Steering Committee (NCCSC), Ministry of Water and Environment. CDM is not yet well established in Uganda
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The NFA was created in 2004 with the mandate to help create “a sufficiently forested, ecologically stable, and economically prosperous Uganda”13. NFA recognizes that said that there is a need for a mitigation and management plan for Mabira forest reserve, and that this is a recommendation of the SEA. In cooperation with NFA, BEL, and other stakeholders, the Contractor will develop a mitigation and management plan for the Mabira Central forest reserve, including at least the following steps:
• Consult with the National Forestry Authority to establish the goals and objectives of the management plan for Mabira, and to establish a working relationship with NFA for the development of the plan.
• Carry out consultation with other stakeholders to obtain a cross-section of interests and ideas about the proper management of Mabira.
• Conduct site visits and general GPS surveys to verify the boundaries of the forest reserve and estimate the level and severity of encroachment into the reserve. Prepare GIS maps of this information.
• Investigate the biological/ecological characteristics of the forest (e.g., tree species, soil type, topography, etc.) to determine what is possible and suited for the area.
• Develop a general resource and land use inventory for the forest, including existing cultivated areas, community-based or private commercial forestry areas, watercourses, roads, etc. Add to the GIS.
• Based on the biological/ecological characteristics of the site, recommend silvicultural and administrative practices to achieve the FHA objectives. This may include a plan to allow private or community-based uses in specified areas, and appropriate permitting, management, and monitoring of those areas.
• Estimate the requirement and responsibilities for monitoring and enforcement activities to protect the forest, and estimate resources for this.
• Estimate the financial resources and labor needed to accomplish the planned activities. Review economic/financial considerations to determine which activities are feasible. Prepare a financial plan.
• Develop a time line for accomplishment of the plan.
• Prepare a draft Mabira Forest Management Plan based on the previous activities and in consultation with NFA. Submit the draft plan to USAID and NFA.
• Convene and facilitate a workshop to present the plan to stakeholders and the public, and to obtain inputs.
• Finalize the Mabira Forest Management Plan.
4.3 Timing and Project Duration
The Bujagali Project Management Committee will be in existence for the length of the project development and construction process, and could continue with GoU support for the life of the project. The USAID involvement is expected to be limited to the period from notice to proceed to the commissioning and full operation of the project, currently expected at the end of 2010. The Contractor should anticipate mobilizing in Uganda within two weeks of notice to proceed and continuing services through December 2010.
13 See www.nfa.org.ug
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4.4 Indicative Program Budget
The direct costs associated with implementation of the project over three years are estimated to be: Activity 1 - US$360,000; Activity 2 - US$225,000; Activity 3 - US$450,000; Activity 4 - US$225,000. These are indicative program implementation costs only, and do not include the Consultant’s personnel or other direct costs.
4.5 Relationships and Responsibilities
The Contractor shall report to the USAID/Uganda Mission Environmental Officer (MEO) or his/her designee. The Contractor will be responsible for identifying and obtaining the majority of the reference materials needed for this study with only minimal interventions on the part of USAID/Uganda. The Contractor will also be responsible for carrying out field investigations / audits, conducting meetings and / or workshops with interested parties, and other actions necessary to carry out the statement of work.
The Contractor, in coordination with USAID/Uganda, will work with GoU national and local authorities, civil society, non-governmental organizations (NGOs), multilateral funding agencies, other donor governments, and the private sector to ensure that coordination, communication, and transparency are cornerstones of the program.
The Contractor will be aware that it does not have the authority to commit funds or enter into agreements on behalf of USAID. Any requirements in this respect are to be presented in writing to the MEO with appropriate documentation and justification for action by USAID.
4.6 Deliverables
There shall be eleven deliverables under this contract:
1. Inception Report. The Contractor shall provide USAID with an Inception Report containing a detailed work plan and schedule within 30 calendar days of notice to proceed. The work plan will expand on this Statement of Work and the Contractor’s accepted technical proposal, noting any changes or modifications required. The work plan and schedule shall also contain a list of those individuals and agencies that are to be interviewed, and a list of reports, evaluations, etc., to be reviewed. USAID will review the report within ten working days and notify the Contractor of its concurrence with the Work Plan and Schedule or note suggested modifications.
2. Draft Constitution for the Project Monitoring Committee. Within 45 calendar days of notice to proceed, the Contractor will submit to USAID and to GoU a draft document specifying the policies, procedures, responsibilities, and role of the PMC and the way that the Contractor proposes to support the PMC. In the event that GoU has convened the PMC at this time, the Contractor will present the draft Constitution to the PMC for review and comment prior to submitting to USAID. Should this process cause a delay in the draft submittal to USAID the Contractor shall so inform the MEO, who may elect to grant an extension or require a different approach.
3. Final Constitution for the Project Monitoring Committee. The final report is due no later than two weeks after receiving USAID/Uganda’s comments on the first draft report. This will then be presented to the GoU and to the PMC at the earliest opportunity for their review and adoption.
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4. Draft Monitoring and Mitigation Plan. Within 60 days of the notice to proceed, the Contractor will submit to the USAID and to the GoU a detailed draft monitoring and mitigation plan to address water quality and fisheries issues, reforestation, and enhanced management of the Mabira Forest Reserve. The plan should be compatible with the SEAP and be discussed and coordinated with the BEL Environment Manager prior to submittal to USAID.
5. Final Monitoring and Mitigation Plan. The final report is due no later than two weeks after receiving USAID/Uganda’s comments on the first draft report. This will then be presented to BEL, the GoU, and to the PMC at the earliest opportunity for their review and adoption.
6. Implement Water Quality and Fisheries Plan. In consultation with USAID and the Government of Uganda, manage the implementation of the water quality and fisheries plan within the budget and time frame specified in the approved plan.
7. Implement Reforestation Support Plan. In consultation with USAID and the Government of Uganda, manage the implementation of the reforestation plan within the budget and time frame specified in the approved plan.
8. Draft Mabira Forest Management Plan. The Contractor shall provide, within four months of notice to proceed, a draft plan for the management of Mabira Central Forest Reserve. The plan will be presented also to NFA and to the public in a workshop to be facilitated by the Contractor (see Item 10 below). USAID will provide comments within ten working days of receipt.
9. Final Mabira Forest Management Plan. Within 30 days of receiving comments from USAID, and mindful of inputs and feedback received from NFA and the workshop, the Contractor shall finalize the Mabira Forest Management Plan and submit to USAID and NFA.
10. Monitoring Reports. The Contractor shall submit to BEL, the PMC and to USAID reports according to the Monitoring and Mitigation Plans in Item 5. It is estimated that these reports will be submitted on a quarterly basis.
11. Support to the PMC. The Contractor is expected to act as the technical secretariat to the PMC, and will facilitate meetings, review reports and other evidence presented under the SEAP, and carry out other duties as outlined in Section II.B.2, above.
12. Public and Stakeholder Workshops. The Contractor shall facilitate an annual workshop convened by the PMC to inform the public and obtain feedback on the progress of the BHP SEAP. An initial workshop to introduce the PMC and the Contractor and to discuss their roles and responsibilities will be held within 60 days of notice to proceed. Two additional PMC-related workshops will be held, at approximately annual intervals, including one at the commissioning of the project. A separate additional workshop is anticipated to present and discuss the Mabira Forest Management Plan, for a total of four workshops under this Contract.
13. In-country Mission Briefings. The Contractor shall meet with USAID/Uganda on a monthly basis to provide them with a brief of the progress of the work and to discuss any issues or concerns that may have arisen. The briefings shall be accompanied by a two-page written progress summary.
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The Contractor will furnish both electronic file versions of all submissions (first draft and final report) and five copies in English, including one photocopy-ready version of the final reports.
4.7 Acceptance Criteria
The deliverables will be evaluated according to the following criteria:
• Thoroughness and timeliness in complying with all of the elements laid out in the tasks;
• Quality and clarity of analysis and work produced;
• Timeliness and efficacy of communications with relevant counterparts and other; stakeholders, donor agencies and involved organizations;
• Compliance with GoU guidelines or regulations on environmental assessment processes, and with USAID’s Environmental Policies.
4.8 Staffing
It is anticipated that the following Key Personnel, all having professional working knowledge of the English language, may be required at a minimum to carry out the terms of the Contract:
1. Team Leader preferably with at least 15 years of international experience, having an advanced degree, and broad knowledge in infrastructure development (especially water resources), environmental assessment, project management, and institutional strengthening. The Team Leader should have significant experience in undertaking environmental assessments, reporting, capacity building, and environmental advisory services. This is anticipated to be a full time position for the duration of the contract. Responsible for overall management of the USAID Bujagali program. Primarily supports the PMC.
2. Deputy Team Leader preferably with at least 10 years of environmental experience, having broad knowledge in environmental assessment and project management, and environmental issues in Uganda. This is anticipated to be a full time position for the duration of the contract. Responsible for providing management support / backup to the Team Leader. Primarily supports the PMC.
3. Social Impact Assessment Specialist(s) preferably with at least 15 years of international experience at senior level, including operational experience with WB OP 4.12. (Anticipated three person-months). Primarily supports the PMC at the direction of the Team Leader.
4. Public Involvement Specialist preferably with at least 10 years of international experience at senior level. (Anticipated four person-months). Primarily supports the PMC at the direction of the Team Leader.
5. Fisheries Ecologist(s) with at least 10 years of experience at a senior level, with knowledge of Lake Victoria and Nile River basin ecology desirable. (Anticipated three person-months). Develops and oversees the “Water Quality and Fisheries Monitoring and Mitigation Activity” and provides support to the PMC.
6. Forester(s) with at least 10 years of experience at a senior level and knowledge of tropical forest ecosystems and Uganda forestry desirable (Anticipated four person-months). Develops and oversees the “Reforestation Support Activity” and provides support to the PMC
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7. Hydrologist(s) with at least 5 years of experience at a senior level (Intermittent inputs). Primarily supports the PMC at the direction of the Team Leader.
8. Sociologist or Cultural anthropologist with at least 10 years of experience at a senior level and knowledge of Ugandan social and tribal structures (Intermittent inputs). Primarily supports the PMC at the direction of the Team Leader.
9. Civil Engineer(s) with at least 5 years of experience at senior level in water resources infrastructure design, construction, and/or operation management (Intermittent inputs). Primarily supports the PMC at the direction of the Team Leader.
10. GIS / Data Management Specialist(s) as required to develop and maintain a thorough documentation of PMC activities, and to support the plans developed under this Contract. Supports the Fisheries, Reforestation, and Mabira activities.
11. Office management and technician support, as necessary.
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ANNEXES
32
33
ANNEX A
LIST OF PERSONS MET
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35
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ANNEX B
RECOMMENDATION FOR PROCUREMENT
There are a number of possible approaches to the procurement for the USAID Bujagali Project, including contracts (specific deliverables contract with a single contracting firm or individual personal services contractors), cooperative agreement grant(s) to the developer, or cooperative agreement grant(s) to an involved government agency. The aspect of the safeguards process (mitigation and monitoring) proposed to be supported by USAID demands the highest level of transparency and impartiality. As mentioned in the main report, the Bujagali Hydropower Project is opposed by many NGOs and others, who have over the years expressed a lack of trust in the government and the developers. For that reason, it is not recommended that grants be made to the developer or the government for the procurement.
The USAID project is anticipated to last for at least three years. It will involve a number of different activities requiring inputs from various technical experts, and an experienced international Team Leader who will reside in Uganda. The recommended project involves providing technical services to the Project Monitoring Committee, and it is not possible at this time to anticipate all the various types of studies and evaluations that will be needed. In addition, the level of effort on the part of USAID/Uganda that would be required for managing numerous individual consultants makes it unlikely that USAID will support this approach.
It is therefore recommended that USAID procure the Contractor services through a contracting arrangement with a qualified international firm who will be responsible for including on their team appropriate local experts, and who will be capable of carrying out the implementation of the program. The statement of work presented in the main report indicates the tasks and activities and types of expertise likely to be required for the project, and can be used as the basis for a Request for Proposals.
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ANNEX D
CONSULTANT WORK ACTIVITIES
Work Activities
The Consultant arrived in Kampala on July 20, 2007. He carried out the following activities. Minutes of all meetings are attached to this memo:
• July 21 met with USAID officers to discuss the project and the schedule for the next few days. The USAID officers were Ron Greenberg, Jody Stallings, and Dennis Panther.
• July 22 in the hotel reviewing Bujagali materials.
• Monday, July 23 the Consultant met with the National Forestry Authority and the National Environmental Management Authority.
• July 24 -- traveled to the field to inspect the Bujagali project area, including the Kalagala falls and the Mabira Forest Reserve. See trip report in this Annex.
• July 25 -- meetings with the National Association of Environmental Professionals (an NGO critical of the project), and several other NGOs, the World Bank Uganda resident mission, and the US Ambassador and Economic and Commercial Officer at the US Embassy to brief them on the progress of the mission.
• July 26 -- participated in a videoconference with five World Bank officers in Washington to discuss the project and obtain inputs regarding the WB involvement.
• July 27 – contacted GTZ (German Aid Agency) regarding their involvement in the project, but the relevant officer was not in the office.
• July 28-30 -- report preparation in Kampala
• July 31 – meeting with Jody Stallings to discuss the draft report. Submitted Draft SOW. Departed Uganda.
• August 12-16 – revisions to the Draft SOW and report based on comments received from Jody Stallings and discussions with RTi. Submitted Final SOW and other documents reflected in this report.
Documents Developed or Obtained during the mission
• Minutes of Meetings held in Kampala (in this Annex)
• World Bank’s Project Information Document (PID) (see Annex G)
• Trip report for Bujagali field visit (in this Annex)
• List of persons met and business cards (see Annex A)
• Excerpts from the Bujagali Hydropower Project, Social and Environmental Assessment main report: BEL’s SEAP Commitments (Annex H)
• Statement of Work (SOW) (Chapter 4) for the recommended Monitoring and Mitigation Activities (MS Word and pdf files submitted) The MS Word SOW is presented in both “Track changes” mode and as a “clean” document. Tracked changes are in response to comments received from USAID on the draft SOW.
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Summary
The Bujagali Hydropower Project (BHP) is a complex and controversial project that has been under consideration and scrutiny for over ten years. It is a necessary next least-cost project needed to resolve Uganda’s serious energy shortfalls. The first developer abandoned the project in 2003 after carrying out considerable work on design and environmental studies. The project has been the subject of criticisms from international and Ugandan NGOs and the current developer has done much to address the concerns they have expressed. Nevertheless, there remains distrust of the Government and the developer on the part of vocal NGOs and others. The USAID involvement can support confidence building in the environmental and social safeguards that have been committed to by the developer and the Government by providing support to the monitoring program and by enhancing the mitigation program proposed by the developer. Given the needs in this area, and USAID budget limitations, it is recommended that USAID participate in four main monitoring and mitigation activities, as follows:
1. Support the Project Monitoring Committee Activity. The National Environmental Management Agency (NEMA) has approved the project with a number of conditions, including the establishment of a Project Monitoring Committee (PMC) that includes representatives from government, civil society, and other stakeholders, and that will ensure that environmental and social mitigations, agreed to in the Social and Environmental Assessment (SEA) and Social and Environmental Action Plan (SEAP) are complied with. The PMC will carry out an important oversight function in this regard, and will provide recommendations to GoU and the funding agencies for acceptance, denial, or modification of proposed amendments or clarifications of the Action Plans, including the umbrella SEAP. The USAID Contractor will be responsible for the technical evaluation of the proposed Action Plans or their modifications during the term of the USAID Contract, reporting their findings to the PMC. The Contractor will also provide support to the committee to ensure that it has the capacity and capability to impartially assess ongoing SEAP implementation, recommend corrective actions, carry out a transparent public and stakeholder dialogue, and report to the GoU and the funding agencies on the status of environmental and social safeguards. Should corrective actions be required, or should certain mitigation measures be required that were not anticipated and agreed to by BEL or GoU, the USAID Contractor will develop a succinct set of operational procedures for accessing USAID or seeking other available funds to carry out these actions. This would include identifying appropriate contracting or procurement mechanisms for the necessary actions, with USAID concurrence.
2. Water Quality and Fisheries Monitoring and Mitigation Activity. The developer’s SEA presents a relatively benign picture of expected water-related impacts and there is a concern that some of the baseline monitoring that is needed to establish the status of issues such as the presence of endangered species or the need for future re-stocking of fish in the reservoir area has not given conclusive answers. The USAID Contractor will develop and implement a water quality and fisheries monitoring plan that uses as a starting point the information gathered during earlier Bujagali Project development studies in 2001 and 2002, and the limited baseline monitoring completed for the current SEA. In addition to the monitoring program discussed above, the USAID Contractor will coordinate with the BEL Environment Manager, the
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PMC, NAFIRRI, and local stakeholders to develop and implement an enhanced, sustainable water quality and fisheries program for the impacted areas. This will entail ensuring that the BEL commitments are met and that additional activities identified in this planning process (if necessary) are implemented under the USAID program.
3. Reforestation Support Activity. The SEAP provides for the support to reforestation activities in the Kalagala Offset area and along the banks of the Nile downstream of the Bujagali dam. The main purpose of this activity is to develop and implement an enhanced, sustainable plan for reforestation that includes the BEL SEAP commitments, uses input from affected stakeholders in the impacted area, and coordinates with NFA’s programs. Reforestation is labor-intensive and can be costly. To be successful, it is necessary to have clear goals and objectives regarding the project and how it will tie in to the needs of the nearby communities. The Contractor will develop and implement a plan that will, at a minimum include consultation with the National Forestry Authority (NFA) regarding the project; clarification of land ownership and permitted uses in the areas being considered for reforestation; consultation with the affected communities to ascertain their needs and attitudes toward reforestation; consultation with other stakeholders, such as environmental groups or eco-tourism operators regarding the goals of the reforestation programs; design of an appropriate detailed program for each of the areas to be forested, including a definition and bounding of the areas to be reforested, schedules and a list of needed funding, resources, and anticipated labor and other inputs; provide operational and institutional advice and support to communities carrying out the reforestation; investigate the possible application of CDM to the BHP program and in particular the reforestation. If promising, consult with the relevant Ugandan authorities to establish a process for incorporating this to the program; and, monitor the program and report to the PMC.
4. Mabira Forest Management Activity. Reforestation is only one method of the restoration of wise and sustainable use of land resources. In many cases, it is better to ensure the conservation and adequate management of existing forests, particularly natural ones. In the case of the Mabira Central Forest Reserve, there is expected to be approximately 70 ha of forest impacted by the construction of the transmission lines from Bujagali. An agreement has been reached between the developers and the NFA to enhance the management of the Mabira reserve as mitigation for the impact. NFA recognizes that said that there is a need for a mitigation and management plan for Mabira forest reserve, and that this is a recommendation of the SEA. In cooperation with NFA, BEL, and other stakeholders, the Contractor will develop a Mabira Forest Management Plan and provide other support to NFA.
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Meeting Minutes
July 23, 2007; 2:30 pm National Forestry Authority (NFA) NFA Headquarters P.O. Box 70863 Kampala, Uganda
Attendees Hudson J. Andrua, Director Natural Forests Division, [email protected] Xavier Nyindo Mugomya, NFA Paul Buyesah Musomoli (sp?), Ag. Director, NFA Obed Tugumisirize, Plantation Development Specialist, NFA Ron Greenberg, Chief AFR/SD/EGEA, USAID, Washington, [email protected] Jody Stallings, Natural Resources Management Advisor, USAID, Kampala [email protected] Patrick Mwesigye, Environment and Social Manager, Bujagali Energy Ltd. (BEL), [email protected] Armando Balloffet, Environmental Specialist, [email protected]
Discussion
The meeting was arranged by Jody Stallings to provide the team with background information on NFA’s program with respect to the central forest reserves and to discuss USAID’s and NFA’s potential involvement in the Bujagali project.
The National Forestry Authority was created in 2004 with the mandate to help create “ a sufficiently forested, ecologically stable, and economically prosperous Uganda” (see www.nfa.org.ug). Mr. Andrua opened the meeting and explained that the Executive Director was away from the city and so could not meet with us. He explained that the NFA works at the ministry level and provides the best professional teams with respect to forestry. Patrick Mwesigye gave a brief introduction of the BEL program regarding reforestation at the Kalagala offset, where they are working with NFA to reforest 400 ha. He also mentioned that the transmission line going through the Mabira forest will have some impacts, and that BEL will provide compensation to NFA. The funds will be used by NFA for improving management of the forest. There is a possibility of a BEL / USAID partnership to make the project environmentally and economically friendlier. The Project has a limited “notice to proceed” to carry out design and other preparatory work. Construction of the dam is to start in September and continue for about 44 months.
Ron Greenberg provided an introduction on the USAID programs and interest in this project, emanating from the African Global Competitiveness Initiative (AGCI), building sub-Saharan Africa’s capacity for trade and competitiveness. He explained that trade expansion cannot be achieved without affordable and reliable energy. Since the Bujagali project already has financing arranged, USAID is interested in providing value-added impetus to the environmental and social mitigation aspects of the program.
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USAID sees involvement in three areas: fisheries, water quality, and reforestation. In any event, USAID needs to work in a transparent manner with respect to its involvement.
Mr. Musomoli (sp?) said that there is a need for a mitigation and management plan for Mabira forest reserve, and that this is a recommendation of the EIA. Similarly, there is a need for support to community forest management programs, with training and small grants to get people started. Seeds can be provided by the national seed center, or can be provided by NFA.
Jody Stallings said that there were some issues that needed to be resolved in the degraded areas to be reforested, such as whether they are to have a permanent tree cover or are designed for sustainable harvesting. In addition, it will be necessary to know who owns the land where these efforts are to take place. Patrick Mwesigye said that NEMA has the authority to manage lands within 100 m of the high water mark along the rivers. In addition, NEMA claims that the islands in the river cannot be owned privately, and the private leases on the islands are to be canceled. This would include rafting operators. For the Bujagali forestry program, the people want to know the exact boundaries of the area to be reforested, and the purpose of the forestry there. Patrick clarified that downstream of the dam BEL has permits, but does not own or lease the land.
There was discussion of the possible use of the islands as community forest reserves and even a chimpanzee reserve in one of them.
Mr. Anrua mentioned that at the Kalagala falls there are 104 ha of forest reserves. Adrift (rafting company) has 16 ha that they are trying to revegetate with indigenous species for ecotourism. NFA is highly flexible in working with communities, and can zone areas as strict reserves, buffer areas, etc. There will be a need to address education in conservation while meeting the needs of the people. It was mentioned that the Bujagali SEMP has training components for livelihood improvement. Ron indicated that there are different models for community forestry, such as strictly policing the conservation areas. Given the resources available to NFA, it is likely that a consensus model will be most sustainable, as has been seen in other parts of the world. NFA agreed and said that the consensus building took time and some small resources (buying meals for meetings, etc.)
Jody Stallings asked whether there was an option to apply for carbon credits for the 400 ha to be reforested. There was some interest in pursuing this. However, the CDM system is not well established yet in Uganda, and there is a need to coordinate with the DNA (Designated National Authority). There is apparently some support for the CDM program in Uganda from the Austrian Government, and AFD may want to participate but has not made a decision yet. There was a request from NFA that USAID assist in finding private carbon credit buyers in the US, putting them in touch directly with communities in Uganda.
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Meeting Minutes
July 23, 2007; 4:00 pm National Environment Management Authority NEMA House Plot 17/19/21 Jinja Road P.O. Box 22255 Kampala, Uganda
Attendees Waswa Ayazika Arnold, EIA Coordinator, [email protected] Ron Greenberg, Chief AFR/SD/EGEA, USAID, Washington, [email protected] Jody Stallings, Natural Resources Management Advisor, USAID, Kampala [email protected] Patrick Mwesigye, Environment and Social Manager, Bujagali Energy Ltd. (BEL), [email protected] Brett Ogilvie, Principal, Tonkin & Taylor, (BEL Consultant), [email protected] Armando Balloffet, Environmental Specialist, [email protected]
Discussion
The meeting was arranged by Jody Stallings to provide the team with background information on NEMA’s involvement with Bujagali and to discuss USAID’s potential involvement. The National Environment Authority (NEMA) is the principal agency responsible for the management of the environment in Uganda and coordinates, monitors and supervises all activities in this field (see www.nemaug.org).
Patrick Mwesigye gave a brief introduction to the BEL environment program and commitments as they are now. Brett Ogilvie gave an overview of the work done to date in the biophysical environment, including the extensive monitoring program for fisheries and water quality, obtaining permits for reforestation in the 100m strips along the riverbanks and at Kalagala, and agreeing on compensation for the 72 ha of forest to be taken from Mabira Forest Reserve.
Ron Greenberg mentioned the existing USAID support for the Kalangala reforestation to the tune of $750,000. He mentioned that the Bujagali project has lots of oversight from the US Congress and USAID needs to be ready to justify its action with regard to involvement in Bujagali.
Mr. Ayazika stated that NEMA has approved the Bujagali project, with conditions, including annual and quarterly reports including a November 2008 audit. NEMA has provided support in the development of the environmental studies and provided permits for activities within the riverbanks, including the riverbed where the damn is to be built.
BEL will be working with NFA and NAFIRRI for the reforestation and fisheries monitoring and mitigation measures. With regard to Mabira, there is some mitigation needed, but it was unclear whether there had to be compensation to private tree farmers within the reserve.
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There is to be a Project Monitoring Committee (PMC) with broad membership that will have the responsibility to make sure that the SEMP is being accomplished. The Committee has not yet been convened. At one point, it was thought that GTZ would support the committee, but that apparently is no longer the case. Apparently, GTZ will not fund government efforts but may fund others involved [all this will be checked by Balloffet]. BEL would be conflicted from funding the PMC unless a separate fund is established that they have no control over. Funding for the PMC is needed because some of the players may not have funds to do this. In addition, there is a desire to provide the PMC with a degree of independence that can be fostered by providing them with a secretariat or technical support group. There was a discussion of potential members of the PMC, including the Uganda Wildlife Authority, and NGOs (some of whom have been in opposition to the project for a long time). It would be useful to have the PMC in place before construction starts, so action will be needed soon on this. BEL has expressed a preference that NEMA be the convener.
The question was raised as to how the Kalangala PMC is doing. It receives funding, but apparently does not meet as often as necessary.
The district environmental officers work for the Districts, not NEMA, but NEMA provides them with practical and political support. They do the day-to-day work in the field. NEMA also has available “gazetted environmental inspectors” giving them the backing of the law.
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Meeting Minutes
July 25, 2007; 8:30 am National Association of Professional Environmentalists P.O. Box 29909 Kampala, Uganda
Attendees Frank Muramuzi, Executive Director, NAPE, [email protected] An additional 11 participants from various NGOs attended (see Annex A) Ron Greenberg, Chief AFR/SD/EGEA, USAID, Washington, [email protected] Jody Stallings, Natural Resources Management Advisor, USAID, Kampala [email protected] Armando Balloffet, Environmental Specialist, [email protected]
Discussion
The meeting was arranged by Jody Stallings to provide the team with background information on the NGO community’s perception and ideas about Bujagali and to discuss USAID’s potential involvement. There was some confusion because the meeting was originally thought by USAID to be with Mr. Muramuzi only, and that he had indicated that he only had a half hour for the meeting. Although all the participants stated their main thoughts, there was not a full discussion.
Another issue was that there was a reporter from the Baltimore Sun (currently stationed in South Africa). Greenberg informed him that USAID has a procedure for press involvement that is followed prior to the event and Stallings gave him the contact name of the public information officer at USAID. As a result, Greenberg said that the discussion would have to be off-the-record, and the reporter agreed.
Muramuzi led off the proceedings by giving USAID some literature (see attached list), and pointing out the main issues that are of concern with regard to Bujagali at this time. He said that it was a “good project” but that there were unresolved issues, as outlined by him and the other participants:
• Hydrology (insufficient water likely for more than 120-130 MW as opposed to the 250MW capacity of the proposed facility);
• Cost (the project is now at $860 million, and the tariffs were unaffordable when the project cost was around $550 million);
• Mabira forest (NAPE and many others angry about the government attempt to give away a portion of the Mabira forest reserve to sugar cane producers. Not clear how this specifically related to Bujagali, other than a general distrust of the government’s commitment to the forest);
• Global warming issues not addressed;
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• Cultural beliefs of the adjoining Basoga and Buganda peoples not being taken seriously. The attempt to transfer the Bujagali spirits from Bujagali to Kalagala was a concern because the two spirits were incompatible, in the belief of the locals;
• Tourism potential is not being given enough support. “Tourism there is more important than power”;
• There are no binding or credible commitments from the government to protect Kalagala in perpetuity;
• The resettlement village houses were poorly built and are showing cracks.
• Land titles for the resettlement plots have not been given yet;
• The transmission line goes through some wetlands in order to avoid villages. Concern was expressed about the impact to the wetlands of the towers, but not clear if the NGOs were proposing going through the villages instead;
• A dam safety study is needed, particularly for the Owens Falls dam.
Muramuzi went on to say that everyone in Uganda agrees that there is a need for more electricity, but that other alternatives have not been considered, such as Karuma that have fewer impacts and have a larger catchment area to improve the water reliability. Others in the meeting indicated that the next 30-50 years will most likely see a “low hydrology” scenario, so it would be best to go to Karuma where Lake Kyoga has a more stable supply than Lake Victoria.
Follow-up Meeting
USAID offered to have a follow-up meeting as requested in the next few days since Balloffet would be remaining in Uganda for another week. No meeting was requested.
List of Documents Received from NGOs (Documents turned over to Jody Stallings, USAID-Kampala):
“Unresolved Issues in the Bujagali Dam Project in Uganda – A Lack of Transparency and Public Participation” National Association of Professional Environmentalists (NAPE), June 2007
“Impacts and Possible Solutions of the Water and Electricity Crisis on Small-Scale Businesses in Uganda.” Uganda Coalition for Sustainable Development (UCSD) and NAPE (undated)
“ECOVIC News – East African Communities for the Management of Lake Victoria Resources – 2007 Lake Victoria Cleanup Week.” ECOVIC, 20-26 July 2007
“NAPE LOBBY – Demise of Lake Victoria – Error of the Experts?” 18th Edition; National Association of Professional Environmentalists (NAPE), March 2006
“A Scoping Report on Decision Making Processes Regarding Dams and Development in Uganda” A Publication of the Steering Committee of the Uganda Dams Dialogue, November 2006.
“Children for the Environment Program Uganda.” Ecological Christian Organization (ECO) (undated brochure)
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Meeting Minutes
July 25, 2007; 9:40 am World Bank Uganda Country Office Plot 1 Lumumba Ave Rwenzori House Kampala, Uganda
Attendees Paul Baringanire, Energy Specialist, World Bank Kampala, [email protected] Ron Greenberg, Chief AFR/SD/EGEA, USAID, Washington, [email protected] Jody Stallings, Natural Resources Management Advisor, USAID, Kampala [email protected] Armando Balloffet, Environmental Specialist, [email protected]
Discussion
The meeting was arranged by Jody Stallings to provide the team with background information on the World Bank’s program on Bujagali and to discuss USAID’s potential involvement.
Mr. Baringanire opened the meeting by indicating that the Bujagali project is complex and involves packaging of various components with financing from the World Bank Group, the African Development Bank, and commercial banks. All have safeguards requirements of various kinds, and all have been put in place. The Project Appraisal document has outlined the mitigation plan that is required under the WB guidelines. He asked if USAID was thinking of working within that plan or on some new initiative, and Ron Greenberg indicated USAID would be working within the program that has been agreed to by all parties. Ron went on to describe in general terms the outline of the areas that USAID is interested in. These include operational and technical support for the monitoring committee, water quality and fisheries studies and mitigation, reforestation in the Kalagala area and possibly elsewhere in the project area, and enhanced management of the Mabira forest reserve. Ron indicated that perhaps USAID will be interested in tying the forestry program to community development efforts. As things stand now, it appears that BEL has money set aside for reforestation, but does not have an action plan. NFA may also need support in this area. Mr. Baringanire indicated that something needs to appear to be happening, and that “everyone is watching.”
Mr. Baringanire indicated that he was not the lead on this project, and he arranged for a videoconference to take place the next day with the Washington group involved in the project.
Follow-up Meeting
A videoconference was arranged for July 26, 2007 at the Kampala World Bank office.
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Meeting Minutes
July 26, 2007; 3:00 pm World Bank Uganda Country Office Plot 1 Lumumba Ave Rwenzori House Kampala, Uganda
Attendees In Washington: Malcolm Cosgrove-Davies, Sr. Energy Specialist, AFTEG [email protected] John Kittridge, Principal Environmental Specialist, CESIG [email protected] Belen Castuera, Investment Officer, CININ Warren Waters, Regional Environmental and Safeguards Advisor, AFTQK Steve Lintner, Senior Technical Advisor In Kampala: Armando Balloffet, Environmental Specialist, [email protected]
Discussion
The meeting was arranged by Mr. Paul Baringanire, Energy Specialist, World Bank Kampala. After introductions, Balloffet reviewed for the group the four components that USAID is interested in participating in. These include operational and technical support for the monitoring committee, water quality and fisheries studies and mitigation, reforestation in the Kalagala area and possibly elsewhere in the project area, and enhanced management of the Mabira forest reserve. A question was raised as to whether USAID would have some interest in supporting health-related issues, and Balloffet indicated that this was not currently the thinking but that it could be considered, given the limitations of the anticipated USAID funds for this project.
Balloffet then asked a series of questions, as follows:
“Does the Bank have confidence in the Social and Environment Management Plan that
has been developed by BEL?”
Kittridge replied that the SEMP is fine, but not too generous, and possibly lacking in details. Balloffet suggested that the Monitoring Committee might help give some impetus to better defining and expanding on the SEMP, given that they would have the resources to do this.
“Although USAID may not participate in the resettlement program (other than through the Monitoring Committee), we are concerned that this aspect may not be going well. How does the Bank see the issue?”
Kittridge explained that the Bank had fielded a mission of social impact specialists to ascertain the status of the outstanding issues dealing with resettlement, including the land title aspect. The Bank is satisfied that BEL has looked at the outstanding issues and has made appropriate commitments to address and resolve them.
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“Is the Bank satisfied that the GoU’s commitment to the Kalagala Offset is strong and firm enough?”
Lintner explained that the Bank had obtained assurances from the government back in 2001 that the Kalagala offset (which includes support to Mabira forest) would be observed. However, different individual Ministers indicated to the Bank that they could not support this in perpetuity. Nevertheless, the Bank has worked in the interim to strengthen the commitment, and has signed an Indemnity Agreement. The Indemnity Agreement is not public, but Lintner said the Bank would be open to a meeting with USAID to discuss the gist of the Agreement, if USAID wishes. The Bank has made it clear to the GoU that it would not consider funding a Kalagala project. In addition, the agreement between the Bank and the GoU has the force of an international treaty and is so registered by the United Nations.
“What is expected from the current Inspection Panel investigation, and when will it be completed?”
Lintner explained the procedures and limitations of the IP. Almost anyone can request consideration of an investigation if that person has reason to believe that the Bank has not adhered to one of its policies. The IP will decide whether to carry out a full investigation for this. The IP does not look at any actions by GoU, only WB activities. In this case, there was an IP investigation carried out in 2002, and NAPE has requested a new full investigation. The IP has accepted this request. Lintner emphasized that the IP review is business as usual, and that they do not have the authority to stop or delay the project. The investigation could take from 4 months to a year (depending on the IP backlog). They will issue a set of “findings” (not recommendations). The Bank will develop a Management Response and Action Plan and the WB Board may discuss and suggest adjustments to the program as appropriate. In this case, Lintner believes that the IP will use the previous IP review as a starting point and that it would be unlikely that the findings will suggest very extensive changes.
He said that the African Development Bank is carrying out its own investigation, with similar prospects. He also mentioned that there is a CAO Ombudsman14 recourse available, but that they have not been approached to date.
“Has a Panel of Experts been hired, and will they be permitted to interact with the Monitoring Committee?”
Kittridge and Lintner explained that there are actually two panels that have been hired through BEL: the Environment and Social Panel and the Dam Safety Panel. The E&S Panel will be fully accessible to the Monitoring Committee, but the Dam Safety Panel may not be able to share all the information at their disposal because of security issues dealing with the design and structure of the dam. However, if necessary, the Bank will be available to meet with USAID to discuss a procedure for interaction with the Dam Safety POE.
“What is the Bank’s position regarding the controversy surrounding the hydrology?”
14 The CAO is an independent office that reports directly to the President of the World Bank Group regarding IFC and MIGA projects; see http://www.cao-ombudsman.org/
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The Bank presently has a Norwegian consultant doing an in-depth study of the hydrology of the entire Victoria basin. There is an ongoing Lake Victoria Environmental Management Program under way to look at this issue in a holistic fashion. The second phase of this work will include a riparian study of land and water use. The fact that the East African Community is expanding to include Rwanda and Burundi (observer) makes it more likely that effective actions to can be taken for the protection and management of the Lake. Some large-scale hydrological issues need to be understood better. It was mentioned that 85% of the inflows to Lake Victoria occur as rain directly on the Lake, and that 80% of the outflows are from Lake evaporation.
There was a brief discussion of the accusation that Uganda has been cheating with regard to keeping to the Agreed Curve flows through the Owens Falls complex. Although this may be somewhat justified (and understandable given the power crisis), Cosgrove-Davies indicated that this would be less likely to occur if and when Bujagali is operational, both because cheating will not be necessary and because it may be easier to monitor the releases. Mack Cosgrove-Davies was the principal author of the Project Information Document (attached) and has been the Bank’s Team Leader for the Appraisal.
“Some NGOs are claiming that project costs are now $860 million and are likely to exceed $1 billion. What is the currently assumed cost of the project?”
Ms. Castuera indicated that the Bank sees that the total cost is on the order of US$800 million, with the EPC portion being in the mid $500 million area.
“What is the Bank’s reaction to the proposed scope for USAID involvement?”
Steve Lintner said that he felt that the scope was very reasonable given his general understanding of the budget constraints. He felt that all the areas mentioned would receive added value from the USAID involvement, especially the monitoring.
Follow-up Meetings
1. A meeting was suggested by Steve Lintner between USAID (Ron Greenberg?) and World Bank legal staff (Charles DiLeva?) in Washington to review the current status of the GoU’s commitment for the Kalagala offset and discuss in general the Indemnity agreement on this issue (which is not public). The meeting should probably be arranged through Cosgrove-Davies or Kittridge.
2. A meeting may be needed at some point to discuss further the degree to which the Bujagali Dam Safety Panel of Experts will be able to meet or share information with the Monitoring Committee, since much of their information will be classified for security reasons.
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Field Trip Report
July 24, 2007; 7am to 6pm Visit to Jinja and Bujagali Project area
Participants/Persons Met Ron Greenberg, Chief AFR/SD/EGEA, USAID, Washington, [email protected] Dennis Panther, Team Leader Economic Growth Office, USAID Kampala, [email protected] Nightingale Nantamu, Program Management Specialist, USAID Uganda, [email protected] Haran Sivam, Project Manager, Bujagali Energy Ltd. (BEL), [email protected] (met at Jinja) Patrick Mwesigye, Environment and Social Manager, Bujagali Energy Ltd. (BEL), [email protected] Brett Ogilvie, Principal, Tonkin & Taylor, (BEL Consultant), [email protected] John Lockwood, Construction Manager, (BEL), [email protected] (met at Jinja) John Balirwa, Director, National Fisheries Resources Research Institute (NAFIRRI), [email protected] (met at Jinja) Jonna Kamanyi, NAFIRRI consultant (met at Jinja) Armando Balloffet, Environmental Specialist, [email protected]
Meeting at BEL-Jinja
Upon arrival at Jinja, a short meeting was held to introduce USAID to the BEL Jinja staff. The meeting was chaired by John Lockwood, the BEL Project Manager. Ron Greenberg gave a quick overview of the USAID general areas of interest regarding the project. Lockwood indicated that there was a lot of activity in preparation for the inaugural ceremonies expected in August (date not disclosed) to be attended by the Uganda President, the World Bank President, and other dignitaries. He also mentioned that there are preparations going on to facilitate the Basoga Kingdom in the relocation of the spirits from Bujagali to Kalagala. They will apparently need about four days at the site for the various ceremonies.
The plan as laid out was:
• Visit the construction site
• Visit NAFIRRI and pick up Dr. Balirwa who would accompany us to the site.
• Visit the Dam site
• Visit a Fish Landing Site on the West Bank
• View the Kalagala Falls
• Lunch at the Nile Resort
• Visit another Fish Landing Site
• View Itanda Falls and reforestation area (Itanda Falls are along the east branch of the river; Kalagala Falls are on the west branch at the same location)
• Visit the Resettlement Village.
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Meeting at NAFIRRI
The meeting was chaired by Dr. Balirwa, who also gave a tour of the NAFIRRI facility at Jinja. Ron Greenberg introduced the USAID team and indicated that Bujagali is one of three projects being considered for support by USAID under its current program. USAID is particularly interested in impact mitigation efforts. Dr. Balirwa said that NAFIRRI has been working with USAID for a couple of years in its program with Auburn University which is due to expire in the Fall of 2008. NAFIRRI has also been involved in the development of the current SEA. They have done research, including some monitoring. This has disproved the allegation that there were some endangered fish found only at the Bujagali site. He said that the National Environment Management Authority (NEMA) has insisted on the quality of NAFIRRI research work. NAFIRRI is also a source of fish stocks, and have become involved in issues affecting the general public including providing training for fishermen and conservation efforts at Kalagala. He observed that fisheries come into play on almost all water projects that USAID can be assured of the quality of their scientific work should they become part of the USAID team for Bujagali. Brett Ogilvie then reviewed the current arrangement between BEL and NAFIRRI:
1. NAFIRRI participates in the monitoring program in developing the baseline, including three quarterly surveys of water quality, invertebrates, fish stocks, etc. These surveys are to be repeated for 2 years after the reservoir is filled.
2. Participation in the mitigation / community development program, including work on the fish landings, market improvements, and training fishermen on new techniques due to the anticipated changes in the fish stocks.
3. Discretionary activities, including a biodiversity museum, more training for fishermen beyond the immediate project area, and possibly provision of scholarships.
Nightingale Nantamu stated that USAID has funded some aquaculture projects, mostly ponds but also including some cages. Government has no policies on aquaculture at this time, and more research is needed including the development of local sources of feeds. At this time, there is a need to import floating feed from the US, which makes it too expensive.
There is a demonstration farm near Jinja, and Bujagali farmers could go there for training. NAFIRRI also could be involved in a habitat-creation exercise at the quarry site, for which they have a concept design.
Greenberg and Balirwa then discussed the possibility of amending the Auburn University contract to include some Bujagali work for NAFIRRI. This was tabled for further consideration by the parties. NAFIRRI expressed a preference for a contract with BEL for this work.
Site Visits
Construction site: Earthwork is under way in the preparation of the area to be used for offices, shops, etc. (see picture at right). The area has been fenced off and is guarded. There are some kiosks just outside the gates serving food, etc. for the workers. There have been no erosion
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impacts or encroachment into the river yet, although the West Bank quarry site is very close to the river. Lockwood explained that the first cofferdam, at the upstream end of Dumbbell Island is to be created towards the end of the year and will be done in a few hours. Soon after the downstream coffer dam will be created and then the water left between the island and the west bank will be pumped out to allow construction of the dam foundations and power house. The process will be repeated along the East Bank.
Dam Site View from West Bank. Dumbbell Island across the River. Lockwood explaining the construction process
Construction site on the West Bank
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Current View of Dumbbell Island at dam
site Same view in July
2002
Views of Bujagali Falls (July 2002)
Kalagala Falls from the West Bank Itanda Falls seen from the East Bank
Kiira (left) and Nalubaale dams (Owens Falls) Itanda Falls
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Views of the Resettlement Village
NFA Nile Bank (east) Forest Reserve being reforested in pine for commercial use
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Mabira Forest Reserve from Jinja-Kampala road. Sugar cane growing at Mabira
Forest boundary
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ANNEX E
MAP OF BUJAGALI DAM
Source: World Bank Report No: 38421–UG; PROJECT APPRAISAL DOCUMENT; April 2, 2007
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ANNEX F
EXCERPT OF THE SOCIAL AND ENVIRONMENTAL
MANAGEMENT PLAN
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ANNEX G
WORLD BANK PID
Report No.: AB2857
Project Name UG - Private Power Generation Project (Bujagali)
Region AFRICA
Sector Power (100%)
Project ID P089659
Borrower(s) GOVERNMENT OF UGANDA/PRIVATE SECTOR
Implementing Agencies
Industrial Promotion Services (Kenya) Ltd P.O. Box 30500-00100 IPS Building Kenya Tel: 254 20 228026/9 Fax: 254 20 214 563 [email protected]
Government of Uganda Mr. Fred Kabagambe-Kaliisa Permanent Secretary, Ministry of Energy Uganda Tel: 256 41 234 733 Fax: 256 41 234 732 [email protected]
IDA 1818 H Street N.W United States 20433 Tel: 202 473 4168 Fax: 202 473 5123 [email protected]
Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared March 26, 2007
Date of Appraisal Authorization March 14, 2007
Date of Board Approval April 26, 2007
1. Country and Sector Background
1.1 Country Context
With per capita income of about US$280 in 2005, Uganda is one of the poorest countries in the world. Despite the progress in reducing the national level of poverty, from 56 percent in 1992 to 31 percent in 2006, the population in the rural areas as well as the Northern and Eastern regions remains vulnerable – rural poverty accounts for 90 percent of the national level, and about 61 and 36 percent of the population in the North and East live below the poverty line. Uganda’s demographic characteristics pose a challenge to future growth. The country has one of the highest population growth rates in world of 3.2 percent between 1991 and 2002 (3.5 percent in 2005), very high fertility (about 7 children per woman) and dependence ratios (111 dependants per 100 working people). Life expectancy is low - 49 years at birth. Without commensurate growth in infrastructure, employment opportunities, and productivity,
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demographics will reduce the benefits of economic growth, which is essential for reducing poverty and inequality.
Uganda has experienced impressively robust macro-economic performance in recent years, averaging 6.4% growth between 1990 and 2005. Strong macro-economic policies, a credible program to eradicate poverty and good financial discipline have led to falling poverty levels. Domestic inflation has been slightly above the 5 percent target for the third consecutive year due to inflationary pressures from weather, power shortages, and energy price shocks. The Uganda Shilling depreciated by 4 percent against the US Dollar due to higher demand for foreign exchange to finance the import bill. Overall, due to good macroeconomic management, savings, exports, and foreign direct investment are increasing. Within the region, Uganda has been a leader in the fight against HIV/AIDS, with prevalence dropping significantly during the past decade. The challenge for Uganda is now to deepen the reforms already underway and prevent their reversal.
To accelerate growth, the underpinnings of a market economy need to be further strengthened, exports need to be diversified, new economic opportunities have to be sought, and more needs to be done to attract private sector investment. Although Uganda has made substantial progress towards achieving the Millennium Development Goals (MDGs), more needs to be done to sustain progress and to improve the prospects for meeting all the goals. Special efforts will be needed to improve the quality of education services to ensure that children complete primary education and to eliminate gender disparity at the post-primary levels of education. Greater access to quality health services is also essential to significantly reduce child and maternal mortality rates. Finally, Uganda's very high rate of population growth poses a long-term challenge for growth and poverty reduction.
Power Crisis Impacts on Economic Growth. Even though economic growth and Uganda’s external position were largely consistent with the Government’s program for 2005/06, the ongoing electricity crisis has placed a significant strain on growth over the medium term. The current crisis in the power sector consists of important power shortages that are attributable to delays in adding new generation capacity, an important regional drought over the past few years that has reduced the output of existing hydropower plants, and annual demand growth for electricity of about 8%. Consequently, businesses and consumers have been forced to endure prolonged service cuts, with some shifting production to times when power is available, and many larger businesses are relying on high-cost back up generators. Manufacturing, high-value agriculture (e.g., flowers), and processing industries (e.g., fish) are most affected by power cuts, and profits in these industries are being squeezed15. Other macroeconomic consequences from the current power crisis were inflation that was slightly above projections through September 2006 due to higher energy costs, and the trade deficit widened because of higher oil prices and increases in diesel fuel import volumes for electricity purchased from thermal power plants. The present situation, with
15 Measured Gross Domestic Product (GDP) growth in 2005 of 5.5% was largely unaffected due to these short-term coping strategies and because of the methodology used in estimating GDP that does not fully capture the decline in value added stemming from increased costs.
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extensive load-shedding blackouts, is not sustainable and further delays in augmenting Uganda’s electricity generation capacity could undermine the economy.
Ugandan industrial growth has been constrained by spiraling energy16 and transportation costs, exacerbated by the current power shortages and both inadequate and poorly maintained infrastructure. By diversifying away from traditional exports and industries, such as the coffee sector, the Government (GOU) is attempting to create a more stable and dynamic economic base. However, the infrastructure gap, particularly in energy and transportation, has placed extreme pressure on the cost of doing business in Uganda, especially for the manufacturing and horticultural sectors.
As an immediate priority, the Government is taking steps to resolve the ongoing electricity crisis. It is important to note that IDA currently supports GOU’s short term mitigation measures described further below with a Power Sector Development Credit that is submitted this same day to Board and this Project herein supports directly GOU’s long term measures to resolve the crisis through the addition of important new generation capacity.
Uganda's Poverty Eradication Action Plan (PEAP). Uganda's development objectives are articulated in the 2004 PEAP, the third version of its poverty eradication action plan. The 2004 PEAP restates the country's ambitions of eradicating mass poverty and of becoming a middle-income country in the next twenty years. It articulates a shift of policy focus from recovery to sustainable growth and structural transformation. The PEAP presents specific policies and measures to achieve its objectives, grouped under five pillars: (a) economic management; (b) enhancing competitiveness, production and incomes; (c) security, conflict resolution, and disaster management; (d) governance; and (e) human resources development.
1.2 Power Sector Context
Background. Over the past three years, Uganda has suffered chronic power shortages arising from a combination of: (a) delays in developing additional generation capacity, particularly the Bank Group supported Bujagali private hydroelectric plant, which was to have been in service by now, but is now expected to be in service in 2011; (b) prolonged drought in the region; (c) the unreliability of the dilapidated distribution system; and (d) annual demand growth of about 8%.
Overall Government Strategy. The GOU power sector strategy has been to: (a) promote legal, regulatory and structural sector reforms, including leveraging the role of the private sector in investment operations and future development; (b) provide adequate, reliable and least-cost power generation with the goal to meet urban and industrial demand and increase access; and (c) scale up rural access to underpin broad based development. The Bank has played a key role in supporting the Government’s power sector strategy and reformed policy framework including catalyzing private sector management and capital.
Over the past seven years, the Government has, with Bank Group support:
16 The lack of reliable and available power supply has forced many industries and businesses to run expensive back up generation. The cost of unserved energy which includes this alternative back-up generation has been estimated at US¢ 39.4 per kWh.
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a) Promulgated a new Electricity Act;
b) Established an independent Electricity Regulatory Authority to regulate the sector.
c) Unbundled the State-owned Uganda Electricity Board into separate entities responsible for generation, transmission and distribution;
d) Built on the policy and structural reforms implemented since 1999, to promote the efficient operation of the power sector and to increase the role of the private sector in its operation and future development by concessioning main-grid generation and distribution facilities to the private sector with only transmission controlled by a State-owned company; (see Annex 1 for details on the Government’s comprehensive
power sector reform program);
e) Increased the percentage of urban and rural households with direct access to electricity and promoted grid and off-grid private sector-led rural electrification by establishing a Rural Electrification Agency to provide once-time output-based subsidies; and
f) Started to provide adequate, reliable and least-cost power generation capacity to meet demand and pursue regional power interconnections with the countries of the East Africa Community. This regional approach would benefit all countries involved by diversifying supply sources and reducing investment costs.
1.3 Main Sector Issues and Government Responses
Issue 1: Power Shortages. Uganda’s main source of power is from the Nalubaale and Kiira 380MW dam complex, located at the mouth of Lake Victoria. Firm hydropower output from this complex was reduced from an average of about 270MW as of the end of 2005, to around 120MW in August 2006 because of low Lake Victoria water levels. In contrast, current system demand is about 380MW at peak times and about 290MW at base load, resulting in persistent and acute power shortages that are impacting on growth. The reasons for these power shortages are fourfold. First, there has been a significant delay in power infrastructure development and, in particular, in completing the financing of the Bujagali project, which is the next least-cost generation increment. As part of the previous effort to develop the project, construction was scheduled to commence in early 2002 and the power station was to be commissioned by the end of 2005. Second, the low Lake Victoria water levels, caused by the recent regional drought as well as water over-abstraction for hydropower generation, have resulted in significantly reduced power generation output at the Nalubaale/Kiira dam complex. In this regard, the Government has decreased hydropower production in an effort to return to the principles embodied in the Agreed Curve17. A third contributor to current power shortages has been the high level of technical losses of the distribution system, which are now being addressed by UMEME, the private sector concessionaire. Fourth,
17 The Agreed Curve describes a water discharge rating curve that emulates the natural relationship between Lake Victoria levels and the flow of the Nile River through the Nalubaale and Kiira hydropower dams. It depicts the management of the Nalubaale and Kiira dams in which the volume of water released would remain consistent with what would have occurred under natural conditions, thereby ensuring no change in downstream discharges. Since the Agreed Curve functions as an operating rule for water discharge, such water releases are a function of the lake level at any given period.
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annual demand growth over the past several years increased by about 8%, placing additional pressure on the power system.
It is noteworthy that if the Bujagali project had been successfully financed in 2002, Uganda would have been able to avoid the current economic penalties. Moreover, the reductions in Lake Victoria water levels from over-abstraction for hydropower production may not have occurred. This is because the Bujagali project is downstream of the current Nalubaale/Kiira dam complex, and will re-use the upstream water releases. When commissioned, the proposed project will produce power at a fraction of the cost Uganda is now paying for the supply from thermal power plants running on imported fuel.
Government Actions Already Taken. To mitigate the shortages, the Government has augmented power supply, and has concessioned the distribution license to a private investor with clear the performance improvement targets.
Augmenting Power Supply. The Government has contracted several thermal generation plants running on Automotive Gas Oil -- the only available short-term technical option given transportation and fuel logistics. In April 2005, the Government contracted for electricity supply from a 50MW privately owned diesel power plant. In late 2006, an additional 50MW of thermal capacity was contracted and is being operated by the private sector. In addition, a proposed Power Sector Development Operation (US$306 million, of which US$6.4 million is from the Swedish International Development Agency (Sida) and US$300 million is from IDA), is scheduled for Board Presentation in April 2007. This Power Sector Development Operation will include: (a) the contracting of an additional 50MW of thermal generation capacity to help meet existing electricity demand; (b) demand side management and energy efficiency measures; and (c) financial support to assist the Government in absorbing a portion of the high costs of thermal power generation. These three thermal plants would operate until the proposed Private Power Generation Project (Bujagali) is commissioned in early 2011. Furthermore, the Government is moving forward with a 50MW thermal plant based on less costly Heavy Fuel Oil as an Independent Power Producer (IPP). This plant will provide thermal complementation to the Ugandan power system over the long term. The Government is also actively pursuing co-generation opportunities, accelerating its renewable energy program and geothermal potential. The Government has also reported a domestic oil resource discovery in the Lake Albert region of western Uganda, which would need to be proven as economically viable; this is not expected to have any impact on power generation over the medium term. Despite the additional thermal capacity that is expected to be commissioned over the medium term, however, significant peak and base load shedding is expected to continue until the proposed project is commissioned in early 2011.
Improving Power Transmission & Distribution Performance. A key element of the Government’s power sector reform program has been to concession the power distribution facilities to the private sector as a means to underpin the commercial viability and sustainability of the power sector. In March 2005, UMEME, the private concessionaire, took over the operations of the distribution system under a concession agreement that includes financial incentives to increase the number of connections, reduce technical and non-technical losses and increase the collection rate (see Annex 1). At the time of UMEME’s takeover, system technical and non technical losses were
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around 38%. The billing collection ratio was 80%, implying that prior to the UMEME concession only about 44% of the energy sent out to the national grid was ultimately paid for. Since March 2005, UMEME has improved the collection rate from 80% to 92% (although the rate dropped again to 82% in December 2006 since the June and November tariff increase), decreased system technical and non-technical losses to about 34%, and connected about 36,000 new customers. During the first 18 months of the concession, UMEME invested US$13.6 million for system improvements, and has committed to invest a total of US$65 million during the first five years of the concession. Due to years of neglect of maintenance, inadequate investment, poor management practices and antiquated billing and accounting systems, it will take time and capital to lower technical and non technical losses. This will require implementing a customer verification program, installing new customer management and accounting systems, as well as replacing and installing meters, transformers and poles.
The lack of power available for sale, and the 114% increase in average electricity tariffs that took place in 2006, have affected UMEME’s viability. A major challenge, therefore, has been to ensure that UMEME’s performance under conditions of stress is not further impeded by the impact of reduced electricity supply and high tariffs. To this end, the Government and UMEME recently renegotiated portions of the concession agreements to protect UMEME during the current power crisis from the impact of power shortages and the reduced revenue stream, which are factors beyond UMEME’s control but have a bearing on UMEME’s ability to meet its concession obligations. The Government and UMEME are cognizant that due to the expensive thermal costs in the current generation mix, there is an urgent need to achieve accelerated efficiency improvements in the short to medium term. The restructured concession agreement includes commercial incentives for the concessionaire to reduce losses and non-collection rates.
Issue 2: Power Sector Finances. The impact of the high cost of thermal power on the Uganda power system is considerable, given the small size of Uganda’s installed generation capacity, the low percentage of such installed capacity currently being used, and the high cost of thermal capacity. Electricity tariffs would have to increase to almost US$0.265 in 2007 if the consumer were to bear the full costs of electricity. This is mainly due to the change in generation mix in the medium term (until the commissioning of the proposed project), from a predominantly hydro-based system in mid-2005, to a hydro/thermal mix of 55/45 today, which is expected to reach to about 50/50 by the end of 2007. Prior to the power crisis and consistent with the Government’s reform program, the full costs of electricity supply were being borne by customers. The Government recognizes, however, that during this crisis period, there are affordability thresholds that if crossed, could have serious long-term impacts on the economy.
Government Actions Already Taken. In response to the current power crisis, Government has developed a financing plan (2006-10) to meet the high cost of thermal power generation which includes: (a) implementing tariff increases in 2006 in the order of 114%, which have raised the average retail electricity tariff to UShs318.53/kWh (or about $US0.17 per kWh; (b) annual Government budgetary support of about [US$50 million], to be phased out upon the commissioning of Bujagali in early 2011; (c) the deferment of debt service owed by the generation, transmission and distribution companies to the Government (on-lent donor loans); and (d) a proposed IDA and Sida support of about US$306 million for a Power Sector Development
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Operation (FY07). The combination of these measures should permit the power sector to generate sufficient revenues without further tariff increases until 2012. Electricity tariffs are expected to decline once the proposed Private Power Generation (Bujagali) project is commissioned in early 2011 and the benefits of the loss reduction and efficiency improvements are realized.
Issue 3: Long term sector expansion and Increased Urban/Rural Access to Electricity. Uganda has made commendable progress towards establishing a sector framework that will promote sustainability and growth. However, the Government recognizes that more is needed to fulfill this goal for the longer-term. In particular, the long-term expansion of the sector requires: (a) the addition of least cost sustainable power generation, (b) improving the currently low access to electricity, and (c) regional integration of the transmission and generation system.
Addition of Least Cost Sustainable Power Generation. The current power crisis is partly due to delays in realizing hydropower generation investments in a timely matter. As a result, the Government has had to resort to expensive temporary thermal power generation. In the long run, the Government recognizes the importance of planning and developing future power sector investments in a timely manner and on a least cost basis. Furthermore since the latest drought period which had an important impact on the power generation capacity at the Lake Victoria power stations, GOU also has also recognized the importance of a certain mix of it’s generation sources by keeping hydropower as the least cost power generation source but by complementing those capacities with a certain level of alternative power generation facilities based on thermal or other generation sources.
Government Actions Already Taken. The realization of this Private Hydropower Generation Project which is situated downstream of Lake Victoria on the Nile, will reuse the water that has been evacuated from Nalubaale and Kiira, thereby allowing Uganda to produce more than twice as much power as it would generate with the existing station alone. This Project represents an important long-term least cost and sustainable generation expansion. When commissioned in 2011, the proposed project would immediately displace at least 738 GWh of diesel generation, thus demonstrating the economic penalty that the long delay of realizing the proposed project.
In addition to this Project GOU has also begun to tender out the construction and independent operation (IPP) of a 50 MW heavy fuel oil fired thermal plant with an initial generation period of 15 years. This plant will complement Uganda’s power generation mix on a long term basis and in periods of low hydrology.
Low Electricity Access Levels. Uganda has one of the lowest rates of per capita energy consumption in the world, with only 5% of the population having access to electricity. Service expansion in urban and rural areas has been hampered in the past by political, commercial, and technical issues. The lack of adequate power generation capacity, which has been partially addressed through the commissioning of high-cost thermal power generation, has also hindered progress on expanding urban access to electricity.
The Government has recently started to address this issue of low electricity access by several important measures supported by the Bank Group. Those measures comprise the following: (a) the government has embarked on a Bank-supported Energy for Rural
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Transformation Program (Credit 3588-UG), which is a three phase ten year Adaptable Program Loan. This Program is also supporting up to 43MW from different mini-hydropower projects and 15MW from two bagasse plants, and which are expected to be commissioned in 2008/09; (b) an accelerated plan to reduce system losses and connect new customers; (c) support to UMEME through US$11 million for rehabilitation investments under the Power IV Project (Credit 3545-UG); and (d) IDA and MIGA risk mitigation for UMEME, the private distribution concessionaire18.
Substantial improvements in the access urban and rural access rates can be expected in the mid and long term. The privatized distribution concession UMEME is obliged to invest US$65 million in the next seven years and the ERT Program will begin with its second and third phase in the near future and will support the Rural Electrification Agency REA over the next 6 years.
2. Objectives
The project’s main objective is to provide adequate, reliable, and cost-effective power generation in an economically and environmentally sustainable manner, to contribute to the economic growth and well-being of the Ugandan population. The proposed project would add a significant increment of 250MW of least cost installed power generation capacity to the national grid.
3. Rationale for Bank Involvement
Electricity is a critical element of the Government’s PEAP. Even though the Government has implemented a comprehensive power sector reform program, established a good track record in electricity regulation and privatized distribution and generation facilities, electricity service quality, availability and reliability have been major impediments to sustained investments in the economy and growth. The combined financial resources of the World Bank Group and donors are crucial to mobilize a considerable level private equity and commercial bank lending for this hydropower project (total project costs of US$750 million) that is the next least cost generation option for the country. Moreover, private ownership, management and technical expertise will enhance overall power sector efficiency and performance. The achievement of this project will also help to underpin the power sector reform program implemented to date and will facilitate building private sector confidence in Uganda.
4. Description
The Project consists of development, construction, and maintenance of a run-of-the-river power plant with a capacity of 250 MW on a Build-Own-Operate-Transfer (“BOOT”) basis (the “Project”). The Bujagali power plant will consist of a power station housing up to 5x50 MW Kaplan turbines with an associated 28 meters high earth-filled dam and spillway works. The project will comprise a small reservoir (with an estimated surface area of 388 hectares), an intake powerhouse complex, a 132kV switchyard (to be extended in the future to include a 220kV section), and other associated works.
18 A Partial Risk IDA guarantee mechanism was approved under Privatization and Utility Sector Reform Project (Credit 3411-UG) in December 2004.
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The proposed project is to be developed by Bujagali Energy Limited (“BEL”), a special purpose company incorporated under the laws of Uganda. The Project Sponsors are: (a) Industrial Promotion Services (Kenya) Ltd. (IPS(K)), the Kenya subsidiary of IPS, the industrial development arm of the Aga Khan Fund for Economic Development (AKFED); and (b) Sithe Global Power LLC (US) (Sithe Global), an international development company. The EPC contractor is expected to be a consortium formed by Salini SpA (Italy) and Alstom Power Hydraulique (France) who were selected following a competitive tender under the European Investment Bank’s (EIB) procurement guidelines. The operations and maintenance (“O&M”) operator of the plant will be an affiliate company of Sithe Global.
BEL will also manage the construction of approximately 100 kilometers of 132 kV transmission line, substations, and related works (the “Interconnection Project”) on behalf of UETCL, Uganda’s national transmission company, to evacuate electricity from the facility. The Project will be an Independent Power Producer (“IPP”) and will sell electricity to UETCL under a 30-year Power Purchase Agreement (“PPA”), which was signed on December 13, 2005. UETCL’s payment obligations under the PPA will be guaranteed by GOU through a government guarantee.
Project Location and Salient Physical Characteristics Relevant to the Safeguard Analysis. The Project will be on the River Nile, at Dumbbell Island, 8 kilometers north of the existing Nalubaale and Kiira power plants, in Uganda. The dam will impound a reservoir extending back to the tailrace area of the Nalubaale and Kiira facilities, inundating Bujagali Falls. The reservoir will be 388 ha (3.88 km2) in surface area, comprising the existing 308 ha of the Victoria Nile, and 80 ha of newly inundated land. The reservoir waters will be contained within the steeply incised banks of the Victoria Nile between Dumbbell Island and Nalubaale, thereby minimizing the amount of newly inundated land. The Project will require 125 ha of permanent land take and 113 ha of temporary land take for the Project’s ancillary facilities.
The associated IP, being developed by UETCL, involves the proposed construction and operation of the high voltage electrical transmission infrastructure needed in part to interconnect the proposed Bujagali Hydropower project to the national electrical grid and to strengthen the evacuation of electricity from the Project. The proposed IP includes: (i) a 70 km transmission line to convey power generated to a new substation to be located in Kawanda, on the outskirts of Kampala; (ii) a 17 km transmission line to connect the Kawanda substation to the existing Mutundwe substation, located in the southwest section of Kampala, where some minor upgrades will be needed to accept the new line; and (iii) two 5 km transmission lines to establish interconnections between Bujagali and the Tororo substation in eastern Uganda and the Nalubaale substation in Jinja.
5. Financing
SOURCE: (US$ million) Shareholders up to 151 IDA Guarantee up to 115 Other Lenders up to 532 TOTAL Total 798
6. Implementation
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6.1 Partnership Arrangements
1. The proposed project is a public-private partnership between the private project sponsors (IPS (Kenya) and Sithe Global), the Government of Uganda (including UETCL), the donor community consisting of AfDB, EIB and IDA, bilateral development agencies (Proparco, FMO and DEG and 2 commercial banks , Barclays Bank of South Africa and Standard Chartered. The 250MW Bujagali power plant will be developed, financed, built, owned, and operated by BEL, a private company. A Power Purchase Agreement has been entered into between BEL and UETCL for the purchase of power over a 20 year period. The Implementation Agreement spells out the obligations of the Government and those of the private owner/operator. Consistent with international practice in project finance transactions, the project’s contractual structure has allocated the commercial, technical, and political risks to the parties best able to mitigate them. Financing for the power plant is being arranged by the Sponsors and will include equity from IPS (Kenya) and Sithe Global. Direct lending to BEL will be provided by: IFC, EIB, AfDB and Proparco, DEG and FMO together with lending from commercial banks backed by a PRG from IDA. MIGA is also providing political risk insurance to Sithe Global.
2. The 100km transmission line will be financed by the public sector lending arm of AfDB, with construction management oversight carried out by BEL. The transmission line will be owned and operated by UETCL.
6.2 Institutional and Implementation Arrangements
1. The proposed Project will be implemented by BEL, a special purpose company incorporated as a private limited liability company under the laws of Uganda, to develop, finance, build and operate the Bujagali Hydropower Project on a Build-Own-Operate-Transfer basis. BEL will sell electricity to UETCL under a 30-year PPA. The construction of the project will carried out by an engineering, procurement and construction (EPC) contractor (Salini & Alshtom) under a fixed price, single responsibility turnkey contract UETCL, the Ugandan transmission line company will own and operate the transmission lines associated with the Bujagali project that is being financed by AfDB. Under the PPA BEL is responsible for management of the transmission line construction.
7. Sustainability
To a large extent, the sustainability of the project depends on the financial health of the power sector, which needs to generate, inter alia, sufficient revenues to meet the project’s capacity payment obligations. The institutional, technical and financial assessments of the power sector and the positive track record over the past five years, demonstrate that the Government has instituted a sound legal and regulatory framework that has been able to withstand major trauma due to massive load shedding. The ERA has also implemented substantial tariff increases to cope with the current power shortages and consequent reduction in sector revenues, which has helped to maintain the financial viability of the sector. Moreover, the Government has contributed budgetary support to the sector to cover a portion of the costs of thermal generation critically needed to reduce load shedding – a demonstration of the Government’s ownership of the power sector reform program and the importance of power to underpin economic growth. In addition, the concessioning of power
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distribution facilities to a private operator is expected to improve operational efficiency and performance. Finally, the economic analysis indicates that this project is both overdue and the least-cost generation option for the country, that it is environmentally benign, and that it is affordable to the vastly under-served Ugandan market.
8. Lessons Learned from Past Operations in the Country/Sector
1. The main lessons from the World Bank Group’s privately financed operations in the energy sector include the following:
• Major large private investments should complement comprehensive power sector reform program, in order to establish a sound legal and regulatory framework and thus underpin the financial viability and sustainability of the power sector and new investments.
• Financial viability is enhanced by commercializing power sector operations and promoting private participation in the management, investment, and ownership of distribution facilities.
• World Bank Group support helps to mobilize long term private sector financing for large capital intensive projects (and on better terms), by mitigating political risks for investments in developing countries in which the power sector has not yet developed a consistently long and positive track record.
• Investment decisions should be made based on their technical, financial and economic merits, consistent with macro-economic and sector development objectives; and
• The need to ensure an equitable distribution of risks between the various parties (the Government, the private sector, commercial lenders and stakeholders/consumers) in private sector projects.
2. In addition to the above, there are a number of specific lessons learned from the collapse of the Bujagali Hydropower Project supported by the World Bank Group in 2001. They include the importance of:
a) A strong project sponsor group and a robust financing plan (the export credit agencies unexpectedly pulled out of the 2001 project one month after the IFC/IDA joint Board presentation). The current project has been designed as a Public/Private Partnership (PPP). An important share of the project is expected to be financed by the multilaterals (European Investment Bank (EIB), African Development Bank(AfDB) and World Bank Group). The Power Purchase and Implementation Agreements have been signed by the parties. The sponsors have posted a bid bond to confirm their financing commitment. IFC is a shareholder in IPS. The World Bank Group is satisfied that the joint venture (IPS/Sithe) has the ability to successfully manage the technical and financing aspects, as well as project implementation.
b) The adoption of transparent and competitive process for both the selection of the project sponsor as well as for the procurement of civil works and electro-mechanical equipment contractors. In this case, the sponsors were selected by GoU following an international competitive bidding process as well as the EPC Contractor; the latter was conducted according to EIB’s procurement rules. In addition, the Project Company has implemented a “Code of Conduct” for its operations and the activities of the EPC contractor. The project sponsors have also established a comprehensive monitoring and compliance plan to ensure that the Project
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Company (established by the sponsors) and the EPC contractors adhere to the highest standards of governance.
c) Ensuring the efficient operations of the power sector’s distribution business including improved quality of supply and access. UMEME, the private distribution concessionaire, has been managing and operating the power distribution facilities since March 2005. In spite of the lack of power available for sale and significant tariff increases, performance improvements have been made in collections and in system loss reduction. UMEME has committed to invest US$65 million in system improvements over the next 3 years (of which US$10 million has already been made). A financially viable distribution business will over time help to mitigate the perceived risks of future private investors since this is the primary source of the power sector’s cash flow and is a crucial aspect upon which investors will assess the power sector’s capability to repay new investments.
d) Inspection Panel Findings and Recommendations of 2002. The World Bank Group’s due diligence has taken note of the issues raised by the Inspection Panel in its report of May 23, 2002 and Management’s Response and Action Plan dated June 17, 2002. This includes undertaking comprehensive Strategic Sectoral Environmental Assessment and Cumulative Impacts studies, following the Bank’s disclosure policies, adequate stakeholder consultations, adhering to the Bank’s operational procedures and policies with regard to the economic and risk analyses, as well as the examination of investment alternatives such as geothermal activities.
9. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [X] [ ] Pest Management (OP 4.09) [ ] [X] Physical Cultural Resources (OP/BP 4.11) [X] [ ] Involuntary Resettlement (OP/BP 4.12) [X] [ ] Indigenous Peoples (OP/BP 4.10) [ ] [X] Forests (OP/BP 4.36) [X] [ ] Safety of Dams (OP/BP 4.37) [X] [ ] Projects in Disputed Areas (OP/BP 7.60)19 [ ] [X] Projects on International Waterways (OP/BP 7.50) [X] [ ]
10. List of Factual Technical Documents
Environment
1. Agreed Curve -- Letter dated May 12, 1991 from the Government of Egypt.
2. Letter from the government of Egypt on May 15, 2006 to GOU giving it’s no objection to the new Bujagali project proposal.
19 By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas.
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3. Copy of the Riparian Notifications regarding the intended development of Bujagali II that were sent by the GOU to all other Nile Riparian states in September 2006.
4. Strategic/Sectoral, Social and Environmental Assessment of Power Development Options in The Nile Equatorial Lakes Region, Final and disclosed report prepared by SNC-Lavalin for the NBI.
5. Social Environmental Assessment report for the Bujagali Hydropower Project (HPP) prepared by: R.J. Burnside International Limited; (disclosed final report December 2006); (Report includes also all relevant Resettlement Action Plans).
6. Social Environmental Assessment report for the Bujagali Interconnection Project (IPP/ Transmission Line) prepared by: R.J. Burnside International Limited; (disclosed final report December 2006) (Report includes also all relevant Resettlement Action Plans).
7. Documentation on Kalagala Offset -- April 2001.
8. The Kalagala Offset Agreement-Government of Uganda-July 2001 (update on this expected shortly).
Economic
9. Bujagali II – Economic and Financial Evaluation Study prepared by Power Planning Associates Ltd. (Final report dated and publicly disclosed by IFC on February 26th, 2007).
10. Strategic/Sectoral, Social and Environmental Assessment of Power Development Options in The Nile Equatorial Lakes Region, Final and disclosed report prepared by SNC-Lavalin for the NBI.
Technical
11. Technical Project Review and Assessment Report, prepared by Colenco Power Engineering Ltd.; Draft Report February 2007.
12. Bujagali Hydroelectric Power Project Transmission Interconnection Study Economic and Risk Analysis, prepared by Siemens Power Transmission & Distribution, Inc.; Final report July 2006.
Financial
13. Lenders’ Financial Model.
14. Uganda Power Sector Financial Model; prepared by an independent Consultant for IDA.
11. Contact point
Contact: Malcolm Cosgrove-Davies Title: Senior Energy Specialist Tel: (202) 473-3121 Fax: Email: [email protected]
12. For More Information Contact:
The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500
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ANNEX H
EXCERPT FROM THE BUJAGALI HYDROPOWER PROJECT,
SOCIAL AND ENVIRONMENTAL ASSESSMENT MAIN REPORT:
BEL’S SEAP COMMITMENTS
The following pages are key sections from the larger Bujagali Hydropower Project, Social and Environmental Assessment Main Report.
