Uganda begins construction on long-awaited hydropower project

KAMPALA, Uganda: Uganda began construction Tuesday on a hydropower project that has been plagued by corruption allegations since it was conceived more than 10 years ago to solve this country's power crisis.

The US$799 million (€593 million) Bujagali hydroelectric dam is expected to generate 250 megawatts of electricity by 2011, enough power to light hundreds of thousands of homes and offices.

"This dam will bring down all the problems we are suffering and spur development in the industrial sector," President Yoweri Museveni said at a cornerstone-laying ceremony. "Our people will no longer be dependent on high-cost energy."

Uganda was once heralded as East Africa's power house, exporting surplus electricity to neighboring countries. But Uganda has outgrown its supply, forcing a rationing schedule that leaves the capital of Kampala in the dark for up to 30 hours at a time.

Electricity prices have doubled in the past year to an average of 26 U.S. cents (19 euro cents) per unit — an astronomical amount in a country of 28 million people where per capita income is around US$280 (€208).

But environmentalists and Ugandan lawmakers have opposed the Bujagali project, saying it would displace many people and submerge the Bujagali Falls, where many tourists go whitewater rafting. A corruption scandal led a U.S. building firm to withdraw in 2002 and has plagued public opinion of the project.

The project is being financed by the government, the World Bank and a consortium led by Industrial Promotions Services Ltd, which is based in Nairobi, Kenya. The Aga Khan, spiritual leader of about 20 million Ismaili Muslims, is the majority shareholder of the Industrial Promotions Services Ltd.

Uganda, like many of its sub-Saharan counterparts, relies on hydroelectric power from Lake Victoria, the vast lake shared by Uganda, Kenya and Tanzania. Since 2000, Uganda has sapped all the electricity its dams can produce. Falling water levels on Lake Victoria mean the dams are already running below capacity, exacerbating the power shortages.