Donors query Uganda on excess capacity in Karuma dam

http://www.theeastafrican.co.ke/news/Donors+query+Uganda+on++excess+capacity+in+Karuma+dam/-/2558/1197970/-/item/0/-/j9jc0h/-/index.html

Donors query Uganda on excess capacity in Karuma dam

By JULIUS BARIGABA (email the author)

Posted Sunday, July 10 2011 at 11:52

A new controversy has arisen over Uganda�s proposed 600MW Karuma
hydropower station with donors questioning the wisdom of investing
money in what they call an �exaggerated� generation capacity that will
only be available part of the year.

The project was scaled back from 700MW after intense debate with
development partners. Independent hydraulic engineers, energy
investment experts and some quarters within the donor community now
argue that even 600MW may not be wise, because that maximum can only
be achieved during a small window over the course of the year.

Arguing that a 400-450MW power dam would be ideal, the donors, led by
German financier KfW, are in the process of engaging a new firm to do
another independent feasibility study after disagreeing with that of
government, which recommends a 600MW capacity dam.

�The biggest concern of the donors is that 600MW is a bit too high,� a
source familiar with negotiations over Karuma�s financing told The
EastAfrican last week. �Of course, the government says it will do it
on its own, and that would be very good. But I doubt it can. First,
there is a lot of discipline that is required to pull off a job of
this magnitude. And we all know government lacks that discipline. A
dam is not a small thing, and if you are going to spend $2.2 billion
on such a project, you need to be very careful.�

Coming just weeks after government committed Ush1.2 trillion ($521
million) towards the project in the 2011/2012 budget, this development
sets donors and authorities in Kampala on a collision course. The
government has vowed to start construction of Karuma with or without
donor support.

State Minister for Energy Simon Dujanga told The EastAfrican, �It
seems the donors and ambassadors don�t understand that we are talking
about installed capacity, which is different from generation capacity.
Of course we cannot have full generation capacity all the time,
because we don�t need it. So, those donors who are talking, how
competent are they?�

Mr Dujanga agrees that the dam cannot generate 600MW all the time. He
argues that what is important is for the dam to generate full capacity
mainly during peak hours daily.

There are complex technical, financial and environmental issues at
play. First, the lead donor, KfW, is not convinced that the flow of
water at Karuma, about 110km north of the capital, can support
constant generation of 600MW.

A smaller project would therefore cost less than $2.2 billion, but
operate at full capacity. Environmentalists also argue that a 600MW
project requires a big dam to create the appropriate height to power
the turbines to generate this amount of electricity. If such a height
compromises the environment, donors will not sanction fund.

Speaking on condition of anonymity, our source at one of the potential
Karuma donors said that the government is being obstinate and has
vowed to ignore donor concerns over the financial and environmental
implications of the project, saying that Kampala can foot the quoted
$1.3 billion cost on its own.

But the source added that by the time the project is concluded, the
cost could jump to $2.2 billion, and Kampala may be forced to eat
humble pie and run to the donors for rescue.

It is against this background that donors and investment experts
insist that the government scales back the capacity to 400-450MW.
Should the Uganda government ignore this advice and go ahead with the
planned higher capacity, the donors will not participate if the
project runs into financial difficulties in the later stages.

This sets the stage for a fight between President Yoweri Museveni and
what he has always described as forces from the West that are against
Uganda�s development. Museveni, reading from the same book as his
energy minister, says donors are the champions of double speak, who
say they want the Third World countries to climb out of poverty, but
at the same time set unrealistic conditions around infrastructure
projects such as Karuma because they �think that too much electricity
is bad for Ugandans.�

Besides questioning the competence of donors and diplomats on energy
matters, Mr Dujanga laid the blame for any future delays in Karuma�s
construction at the donors� doorstep. He said the World Bank
particularly contributed to Uganda�s present energy crisis, adding
that these new queries over Karuma are a repeat of unfounded opinions
similar to those that delayed the construction of the 250MW Bujagali
hydropower dam from the late 1990s through the early 2000s.

�Today�s loadshedding is due to the World Bank stopping us from
building Bujagali 10 years ago. We don�t want this anymore. This is
our project and anybody who wants to come on board, whether they are
World Bank or European Union, should come on our terms,� he said.

Generation companies Aggreko and Electomaxx, which were brought in to
provide emergency thermal power when Uganda was at the height of an
energy crisis in 2005/2006, last week shut down their plants over
unpaid arrears totalling Ush300 billion ($117 million). As a result, a
supply shortfall of 50MW and 120MW for day and peak respectively has
emerged, sending the country into loadshedding intervals lasting
longer hours both day and night.

Uganda�s energy infrastructure development has been beset by delays
and false starts. The initial plan in 2006, for instance, was to build
a 200-250MW Karuma dam using the Norwegian firm Norpak�s feasibility
studies. But these were redrawn in 2009 for a much larger 750MW
project, but as bad luck continued to dog Uganda�s energy sector,
Norpak pulled out and sold its interest in the project after a
protracted conflict with the World Bank.

Uganda then hired Energy Infratech Pvt Ltd of India to do a new
feasibility study and environmental impact assessment. It was this
study that zeroed in on the 600MW plant that is now being questioned.
Energy Infratech�s designs will cover a bigger part of the site,
harnessing 9 km of the river stretch and a higher head of 70 metres.

Further upstream on the Victoria Nile section of the Nile are two
power stations, the Owen Falls Dam. Nalubaale is the old colonial era
structure, while the newer Kiira power station was completed at the
start of the 2000s. Built just ahead of Nalubaale against the advice
of hydraulic experts at the time, Kiira has failed to boost generation
due to its poor design, leading to excessive discharge of water whose
levels are already dwindling.

Besides KfW, the European Investment Bank, the World Bank and the
African Development Bank are expected to participate.
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