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.