The churning rapids that surge past a hillside lookout here explode into a ferocious storm of water, beckoning with thrills for some, and power and profit for others.

Just six miles from where the Nile begins its journey north, Bujagali Falls, with its wild stretches of nature, may soon become the site for East Africa’s largest foreign investment project ever.

AES Corp., an Arlington, Va.-based company that has grown into the world’s largest independent power producer, has struck a $500 million deal with the Ugandan government to build a massive dam near Bujagali that would greatly expand power capacity for the country, where fewer than 5 percent of the 22 million residents have electricity.

While constructing a 100-foot-high wall of concrete across the Nile is certainly a technical feat, the business deal is encountering even bigger cultural and environmental challenges.

AES executives, who first undertook the project in 1994, have found much corruption to confront and vociferous opposition to quell. Then there have been the numerous spiritual dimensions to the site that the company has been forced to address.

“We had no idea the depth of the impediments,” Christian C. Wright, the AES country director, said recently, as the project neared its seventh year of development.

In the end, those obstacles are making the vexing tasks of acquiring financing and pushing the project through Uganda’s Parliament seem easy.

The problems are far from solved. Construction, already years late, remains on hold. Mr. Wright estimates that ground will be broken in December but others see the start of the project slipping well into next year.

Moreover, the dam project has been, from the start, a minefield — or more accurately a graveyard and holy site. For many of the Basoga and Baganda people who live at the river’s edge, the Nile is tantamount to holy water. Their lives revolve around the river. Their ancestors rest on its shores. Some believe that spirits remain within the swirling water.

“It has been established that the dwelling places of a number of spirits will require relocation either before construction commences or before the reservoir area is inundated,” AES said in an environmental report that it submitted to the World Bank, which is providing financial backing for much of the project.

To deal with objections from residents, and to ensure approval from the bank’s International Finance Corporation, AES says it will handle this project with special care — not just as another dam.

“No site can be destroyed or damaged until the necessary ceremonies or rituals have been carried out,” says the company’s report, which took years to prepare and fills seven volumes.

The company has produced a map of numerous trees and rocks that the local residents consider the homes of spirits. A ceremony must take place at each site to move the spirit, and another to introduce it to another resting spot. Each ceremony requires livestock for slaughter as well as local millet and banana brews.

Additional ceremonies must take place at each grave site near the dam to properly transfer the remains of ancestors to another location.

Two mass ceremonies are also planned to appease the spirit that resides in the water, one gathering for each of the rival clans that claim to be in touch with the Jaja.

AES has hired a specialist in traditional African religions, John Baptist Kaggwa, to coordinate all the logistics. “Traditionally, community spirits are not supposed to be transferred,” Mr. Kaggwa said.

“What we’re doing is appeasing the spirits. We’re saying to the spirits, `Your home is going to be tampered with. Please allow us to continue.’ ”

For AES, the dam started as a business transaction, one the company maintains will greatly benefit Uganda. Although the details of its deal with the Ugandan government remain confidential, critics of the project say that the company stands to gain $100 million a year at the start of its 30-year operation of the dam.

Most of Uganda’s existing power is concentrated in Kampala and Jinja, the two largest urban areas. In the country’s vast rural areas, candles and lanterns are the rule, with electricity reaching less than 1 percent of dwellings.

It is this modern-day culture that the Ugandan government is eager to change. “This project should have been built 30 years ago,” said Fred Kabagambe-Kalissa, a senior energy official. “All the manufacturers want to kill me. They’re losing hours of production. It’s a real crisis. The lights even go off right here in the Ministry of Energy.”

But the AES dam will not light up Uganda with the flip of a switch.

The country lacks the infrastructure to bring power to residents in most remote areas of the country. And even though AES plans to build 60 miles of transmission lines as part of the dam project, most Ugandans will remain in the dark even after the dam is up and running, which the developers hope will be around 2005.

Still, the dam is expected to almost double the 260 megawatts of electricity now generated in Uganda, largely at another dam built in 1954 further up stream on the Nile.

As for the company’s cultural outreach, critics of the project see opportunism and nothing else. “This company doesn’t understand the culture,” said Martin Musumba, a retired politician who founded the Save Bujagali Crusade. “It doesn’t have anything to do with the money. Culture evolves over generations and you can’t buy it. This company is exploiting people’s poverty by buying them off.”

The dam opponents, who include environmentalists, rafting operators and others, acknowledge that the company’s outreach efforts have squelched much local opposition.

The company is buying up the land of about 400 families and offering them cash, new dwellings or comparable land in exchange, a deal that the company maintains will leave people better off than before. Because few locals have ever held millions of Ugandan shillings at once, the company has brought in bankers to teach financial management skills.

But the residents are not willing to just pack up their things and move, and that is where the ceremonies come in.

Even so, AES has become skeptical about some of those who have come forward with cultural claims. “Somebody comes in and says this tree is a resident tree for such-and- such a spirit,” said Mr. Kaggwa, the company’s cultural adviser. “Verifying the unknown is very difficult. You have to take the person through many interviews and sometimes you can’t disprove them.”

As for the living Bujagali, he believes that AES is acting in its own interest in paying for the ceremonies. He said the spirits, if not appeased, would wreak havoc on the project through construction problems, deaths and widespread illness.

“The spirits,” he said, “would never allow the dam to be built.”