World Bank inflated costs of Karuma hydropower

Badru D. Mulumba
The Monitor (Kampala)
December 16, 2003

Canadian consulting firm Acres International prepared a secret report the World Bank relied on to select which Ugandan hydro project (Karuma/Bujagali) to bankroll.

A proposed hydropower project at Karuma falls was inflated by $200 million. Norpak, a Norwegian company, is developing the Karuma project. Karuma is competing with Bujagali for World Bank’s approval. Confidential details of a report the World Bank relied upon to select, which project (Karuma/Bujagali) to bankroll now places the cost of the proposed Bujagali project at a whopping $580 million. This is $200 million more than the developer’s official estimates. The scam was unearthed by a Norwegian publication, Development Today. A Canadian consulting firm, Acres International, prepared the secret Bujagali report, according to the Norwegian newsletter. “The confidential Acres report,” the newsletter says, “was a key document in the World Bank’s decision to fund Bujagali.” Government, in 1999, decided to develop Bujagali. Subsequently, the World Bank lined up Bujagali – which is now dogged by bribery allegations. AES pulled out of the Bujagali project, which is under investigation by the U.S department of Justic in August. BACKGROUND “In assessing the Bujagali project, the Acres report has been the Bank’s key document. But a closer look at Acre’s analysis of Karuma shows that it has not used the detailed plan and investment budget that Norpak provided to the ministry of Energy in Uganda.” The report, Economic Review of the Bujagali hydropower project, was published in December 2001. Acres has of late had its reputation marred by corruption allegations – with a Lesotho court finding it guilty of corruption. Interestingly, the World Bank management has in the past, described the Acres report as the most comprehensive option analysis undertaken to date for developing Uganda’s power.

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