International Rivers Network and the Bujagali Dam Project (A) Harvard Case Solution & Analysis

Problem Statement

AES is a power plant producer , it prepares a feasibility analysis for Uganda, whose results were evident that the country needs Bujagali dam to encounter its power supply problem. There is an NGO named International Rivers Network was opposing this construction because of the potential social an environmental hazard caused by this project to Ugandan population. For this, the NGO wants to stop the funding approval from World Bank Based on the feasibility report presented from ASE’s country analysis so that the project could be terminated.

The NGO, IRN’s sole purpose is to ensure the environmental safety that is highly connected with the economic stability. Uganda is not in a position to finance this huge power generation project. If the country will allow the launch of this project, then the county would have to go through from heavy debt problems.

Introduction

It has been considered that Uganda is going through the economic downturn due to a shortfall of electricity found in the country. However, analyzing the case thoroughly suggests that the real problem does not exist with the electricity supply, but attached to the poverty problem of the country where people are not able to bear to buy the power.

Q 1: Is the Bujagali Dam project well for the Ugandan people? To answer this question addresses the following points:

Building bujagali dam would increase the construction activities in Uganda, which in turn will increase the employment rate and reduce poverty. This project will also reduce the cost of electricity, which in turn will also make Ugandan citizen lives prosperous.

Strong and continuous System of irrigation would be developed which will also contribute positively to the country’s economic activities and reduced unemployment.

Due to low power supply Uganda’s literacy rate also moved downward sharply, which result in the distressing academic figures in Uganda. With the continuous availability of electricity, the literacy rate could be improved with a fast pace. The economic performance of the country will also grow with a considerable rate. The figure shows, currently the county possesses an economic rate of return in between 10 to 12 percent. However bujagali dam would increase the economic activities and will provide economic returns into16 to 21%, depending on the horse or favorable climatic condition.

Consequences of building bujagali dam

Despite of all positive factors Ugandan government is so weak financially that it cannot bear debt as it will increase its liability. Lack of power supply has also reduced economic activities such as growth stagnation in the manufacturing industry due to which their product limited quantity of goods that badly fulfills public demand up to the level let alone the revenue earned through export which could financially support the country.

The other distressing issue was the displacement place of the local citizens who were living over the place where this dam actually needs to be constructed. It is a matter if disturbing 15000 people from their home town, work and their lives. Their relocation was also a huge problem with the rehabilitating cost of 170,000.Its biggest disadvantage will be its contribution to the poverty level of Uganda because many people would lose their work through this relocation process many, and they would remain jobless. The farmers will lose their farms that are their only mean of earning, on the other hand, the fishers will not be allowed to work at the river side because of construction activities. This whole scenario would have a negative impact on the economic growth from the grass root level.

a)    Is hydropower the most viable power option for Uganda and is Bujagali the best site for hydropower?

Thing from the perspective of electricity generation Hydropower is the most suitable power generation option to boost up the economic health. With the availability of power manufacturing industry would work efficiently with continuous production activities. It is the most suitable option because it is less costly than other power generation plants which were being suggested in the beginning.

According to the environmental and social analysis conducted by the authorities there were three electricity production projects in the pipe line form which bujagali dam was the most suitable because of the construction of this dam would cause average social and environmental loss in Uganda................

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In the summer of 2002, the International Rivers Network (IRN), environmental NGOs located in Berkeley, California, is engaged, it would seem, the last hours of a three-year campaign to stop the $ 582 million dam and hydropower projects on the Bujagali Falls in Uganda. The final part of the funding puzzle is going to put in place, such as the World Bank was established to approve the $ 250 million loan guarantee for the project. Although the project will have some negative environmental and social impacts, IRN argued that the power deal between the Ugandan government and the AES has been a real problem. IRN as seen, the project cost was too high and Ugandans will bear most of the risk, which would add to the debt burden of the country. However, without the agreement of purchase and sale of power, which has remained unsolved, despite requests to be made public, IRN was little economic data on the project in order to support their arguments. However, there were good reasons, such as economic development and poverty reduction, to the Government of Uganda to go ahead with the case had with AES, the project sponsor. AES, with its social mission and reputation for delivering low-cost energy in the world, seemed ideal sponsor. "Hide
by Benjamin C. Esty, Aldo Sesia Source: Harvard Business School 25 pages. Publication Date: Mar 04, 2004. Prod. #: 204083-PDF-ENG

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