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Andrei Bugrov, ED
World Bank Group
1818 H Street, NW
Washington, DC 20433

Re: Bujagali Hydropower Project

Dear Mr. Bugrov,

In December 2001, the World Bank’s Executive Board approved IFC and IDA funding of up to $225 million for the Bujagali Hydropower Project in Uganda. Several other financial institutions including US OPIC, the United Kingdom’s ECGD, and Germany’s DEG have declined involvement in the project. Sweden’s EKN has declined for the time being, and the export credit agencies of Norway and Finland have not yet taken any decisions. According to the reputed journal, “Development Today”, EKN concluded that the project was “too risky”.

Management now hopes to extend a MIGA guarantee of $215 million to the Bujagali project. Such a guarantee would cover the project’s political risk, would pull Nordic export credit agencies back into the funders’ consortium, and would thus rescue the project.

Ugandan and international NGOs have a series of concerns regarding the economic, social, environmental and cultural impacts of Bujagali. Ugandan NGOs and citizens submitted a complaint to the World Bank’s Inspection Panel in July 2001. We assume that the report on Bujagali will be completed very soon, but understand it has not yet been submitted to the Board.

A new report published by International Rivers Network (IRN) on May 14, 2002, suggests that World Bank management and staff have seriously manipulated the appraisal of the purported economic viability of Bujagali, and may in fact have misled Executive Directors when support for the project was approved in December 2001. The IRN report documents that:

· The World Bank’s and IFC’s Project Appraisal Document for Bujagali contains major discrepancies with other relevant Bank documents regarding essential aspects of the project. Discrepancies include figures on crucial aspects of the project, such as the future demand for expensive power from Bujagali.

· The World Bank’s and IFC’s project documents misrepresent or withhold critical information from other Bank documents. They misrepresent the outcome of a private enterprise survey, which is used to justify the project, and do not inform readers that reports commissioned by IFC show a combined-cycle plant and geothermal energy to be the least-cost sources of power for Uganda.

· The Bank’s and IFC’s project documents neglect evidence from other Bank projects, and from other official sources, on important features of the Bujagali project and Uganda’s power sector. Aspects which have been neglected include the potential impact of climate change on Bujagali’s hydrology.

· Finally, the World Bank’s and IFC’s projections have already been proven over-optimistic regarding the growth of Uganda’s export revenues, and overall economic growth.

In conclusion, the IRN report puts forward strong evidence that Bujagali is not the least-cost option for Uganda’s power sector, that the project is economically highly unfavorable, and that it will add to Uganda’s debt burden at a time when the IMF and IDA have recently expressed concern about Uganda’s “very high debt indicators”.

Since the Executive Board approved IFC and IDA funds for Bujagali in December 2001, the context of the project has changed significantly. The IRN report produces serious evidence that Bank management and staff have misrepresented or withheld relevant information on Bujagali. Export credit agencies have declined involvement for economic reasons, which should encourage the Bank to reconsider the viability of the project. Finally, Uganda’s economic situation and debt outlook have deteriorated sharply since December 2001, as documented by an IMF/IDA report in April 2002.

We recommend that before taking any further decisions on Bujagali, the Executive Board should insist that the following conditions are met:

· The World Bank Inspection Panel should submit its report on the Bujagali project to the Board and the claimants, and the Board should have the chance of an informed debate on the Panel’s findings.

· A comprehensive and balanced assessment of all options for Uganda’s power sector should be carried out and submitted to the Board for discussion. In particular, such an assessment should take an in-depth look at geothermal power, which appears to be the least-cost option in the assessment done for IFC by Acres International.

· If MIGA continues to consider supporting the Bujagali project, the economic viability of the project should be reappraised with a more realistic view of essential project and sector features, and taking into account the recent economic down-turn in Uganda.

· The World Bank should request that the Bujagali Power Purchase Agreement be made public, so that the interested public can have an informed debate about the Ugandan government’s long-term obligations under it.

· Civil society in Uganda should have the chance of an informed debate about the Inspection Panel report, the conclusions of an effective options assessment and the Power Purchase Agreement. The Executive Board should take such a debate into account before reconsidering the Bujagali project or its alternatives.

Thank you for your consideration of these concerns and recommendations.

Sincerely yours,

Frank Muramuzi, President National Association of Professional Environmentalists Uganda

Juliette Majot, Executive Director International Rivers Network USA

Carol Welch Friends of the Earth/US

OTHER ENDORSERS (listed by country)

UGANDA

Martin Musumba SAVE Bujagali Crusade

Basalirwa Asuman SAVE Bujagali Crusade, Makerere Branch

Beatrice Obbo National Association of Professional Environmentalists (NAPE) Requester, representing people from Tororo – Eastern Uganda

Kamese Geoffrey Rio + 10 Coalition: Intergrated Fresh Water Management Thematic Group

Timothy Byakola Climate and Development Initiatives

Rosemary Namirembe Uganda Environment Education Foundation (UEEF)

Kimbowa Richard Uganda NGO Rio + 10 Coalition

Sentamu Somon Joint Energy andEnvironment Projects (JEEP)

David R. Mutekanga Uganda Wildlife Society

Kenneth Kakuru Greenwatch

Tabaro Denis and Weizire James Adult Literacy and Basic Education Centre (ALBEC)

Dranda Richard Adult Literacy and Basic Education Centre, Makerere University

Dr. Waiswa G. Baker Interdisplinary Teaching of Human Rights, Peace, and Ethics

S. B. Tindifa Human Rights and Peace Centre (HURIPEC), Makerere University

Kalema Billy Interdisplinary Teaching of Human Rights Peace and Ethics Project, Makerere University

F. C. Oweyegha-Afunaduula Department of Zoology, Makerere University

Kayondo Fred East African Communities Organization for Mgt. of Lake Victoria Resources – Mukono District (ECOVIC)

Mugisa Patricia Organization of Graduate Youth for the Enhancement of Environment Programmes and Poverty Alleviation (OGYEEPPA)

Alfred T. Balinda Requester to the Inspection Panel on behalf of Concerned Citizens

Prof. Jassy Kwesiga and Jane Nabunnya Development Network of Indigenous Voluntary Associations (DENIVA)

Fredric Musisi Kabuye International Institute for Cultural and Ethical Development DENIVA Board of Directors

Dick Nuwamanya ACODE

Bautu Robert Faculty of Law, Makerere University-Kampala

Isoto Bibian Faculty of Law Makerere University

Mayanga Dan Global Insurance Company

Jane Afra Musinguzi Professional Teacher/Environmentalist

Deo Lubega

Sylivia Birungi

ARGENTINA

Elba Stancich Taller Ecologista

Jorge Cappatto Federacion Amigos de la Tierra Argentina (FoEI) FUNDACION PROTEGER

Roque Pedacce Amigos de la Tierra Buenos Aires

Anna Petra Roge de Marzolini Asociacion Ambientalista EcoLaPaz

Susana Garay MyPIMA -Esquel Chubut

AUSTRALIA

Cam Walker and Damian Sullivan Friends of the Earth Australia

Kate Walsh AID/WATCH – Australia

John Sinclair Fraser Island Defenders Organization

Terrie Templeton WTO Watch Community Information Association

BRAZIL

Roberto Smeraldi Friends of the Earth – Brazilian Amazon

BULGARIA

Galina Georgieva NM Ecoglasnost/FoE Bulgaria

CANADA

Pamela Foster Halifax Initiative Coalition

Grainne Ryder Probe International

CHILE

Juan Pablo Orrego Fundación Terram

Andrea Munizaga Comité Nacional Pro Defensa de la Fauna y Flora- Amigos de la Tierra Chile

COSTA RICA

Gabriel Rivas-Ducca Coecoceiba-Friends of the Earth Costa Rica

FINLAND

Tove Selin Finnish ECA Campaign

FRANCE

Roberto A. Epple ERN European Rivers Nettwork

Philippe Lhort SOS Loire Vivante

Camille de Maissin Agir Ici

GERMANY

Heffa Schuecking Urgewald

Heike Drillisch WEED (World Economy, Ecology & Development)

ITALY

Jaroslava Colajacomo and Antonio Tricarico Campaign to Reform the World Bank

Elvira Dizon Franciscan Missionaries of Mary

JAPAN

Ikuko Matsumoto Friends of the Earth Japan

KENYA

Argwings Odera Sondu-Miriu Community Advocacy Campaign

INDIA

Medha Patkar Narmada Bachao Andolan

Ashish Fernandes Sanctuary Asia

S. Parasuraman ActionAid

Shripad Dharmadhikary, Manthan Adhyayan Kendra (Manthan Reserach Centre) Member of Dams and Development Project Steering Committee

Manoj Saranathan Friends of River Narmada

INDONESIA

Anung Karyadi National Coordinator Indonesia for RWESA

Nur Hidayati WALHI (Indonesian Forum for Environment)/FoE Indonesia

MALAYSIA

S.M. Mohamammed Idris Friends of the Earth Malaysia and Consumers’ Association of Penang Malaysia

MEXICO

Cecilia Sànchez INCIDE, Desarrollo y Estrategias en Comunicacion A.C.

MOZAMBIQUE

Anabela Lemos Livaningo

NETHERLANDS

Monique de Lede Friends of the Earth Netherlands

Wiert Wiertsema Both ENDS

Joyce Kortlandt Novib

Chelsea Mozen ASEED Europe – Action for Solidarity, Environment, Equality, and Diversity

NIGERIA

Nnimmo BASSEY Environmental Rights Action (ERA)/Friends of the Earth

NORWAY

Tonje Folkestad FIVAS (Association for International Water and Forest Studies)

PAKISTAN

Naeem Iqbal Pakistan Network of Rivers Dams and People

PAPAU NEW GUINEA

Sanis Kak Kasela Palu Group

PHILIPPINES

Joan Carling Cordillera Peoples Alliance

PORTUGAL

Luís Galrão EURONATURA

Maria João Pereira Liga para a Protecção da Natureza (LPN)

SENEGAL

Demba Moussa Dembele Forum for African Alternatives

SLOVAKIA

Roman Havlicek Friends of the Earth – Slovakia

Juraj Zamkovsky Center for Environmental Public Advocacy

SPAIN

Juan Carlos Rodríguez Murillo Ecologistas en Acción

SOUTH AFRICA

Liane Greeff Environmental Monitoring Group

John Taylor Sustainable Water Forum

Patrick Dowling The Wildlife and Environment Society of South Africa

Patrick Bond, Professor University of the Witwatersrand, Johannesburg

SWEDEN

Johanna Sandahl Attac

SWITZERLAND

Peter Niggli Swiss Coalition of Development Organizations

Christine Eberlein Berne Declaration

UK

Alex Wilks Bretton Woods Project

Sean Scannell Ilisu Dam Campaign

Johan Frijns Friends of the Earth International

Nick Hildyard The Corner House

Chris Woodford UK Rivers Network

USA

Shiney Varghese Institute for Agriculture and Trade Policy

Soren Ambrose 50 Years Is Enough Network

Joanne Carter RESULTS

Paul Jenkin Surfrider Foundation, Ventura County Chapter/Matilija Coalition

Tom Bolema High Desert Greens, Antelope Valley

Paula Palmer Global Response

John Peck University of Wisconsin Madison Greens

Graham Saul Bank Information Center

Dan Silver Endangered Habitats League

Neil Watkins Center for Economic Justice

Diana Bohn Nicaragua Center for Community Action

Mara Vanderslice Jubilee USA Network

Janet Gottschalk, MMS Alliance for Justice

Marty Bergoffen Southern Appalachian Biodiversity Project (SABP)

Bruce Rich Environmental Defense

Shankar Krishnan Friends of River Narmada

Daphne Wysham Institute for Policy Studies

Erica Etelson Project Underground

Rita A. Clark The Nicaragua-US Friendship Office

Mary Turgi Congregation Justice Committee/Sisters of the Holy Cross

Sage Douglas Eagle Remington Southern Ute Grassroots Organization (SUGO) Southern Ute Indian Reservation

Taleigh Smith Dos Pueblos

Alan Muller Green Delaware

Frances Bartelt Wisconsin Fair Trade Campaign /Milwaukee

Noah Madlin Rainforest Action Group for Indigenous Peoples

Tony Littman SF Bay Area Jubilee Debt Cancellation Coalition

Margaret Nagel Neighbors for Peace/GeneWise

Iris Young, Professor Political Science, University of Chicago

URUGUAY

Teresa Perez World Rainforest Movement