Uganda's electric power gap will close in July

The building of a hydroelectric dam to close Uganda's current power supply deficit of 120 megawatts is slated to start in July, the country's energy minister said Tuesday. The US$500 million (Ђ422 million) Bujagali power project has been marred by environmental problems, allegations of corruption since it was conceived in 1994. The deadlock became so bad that the American company tasked with building it, Arlington, Virginia-based AES Corp., withdrew in 2002.

The government advertised for new bids in 2004 and a consortium led by the Nairobi, Kenya-based Industrial Promotions Services Ltd. won the contract. An agreement to start the project next year was signed Dec. 13 between the consortium, Bujagali Energy Ltd., and the government, said Energy Minister Syda Bbumba.

Once finished, the dam is expected to be able to generate 250 megawatts of electricity, enough power to light hundreds of thousands of homes and offices. The Aga Khan, spiritual leader of about 20 million Ismaili Muslims, is the majority shareholder of the Industrial Promotions Services Ltd. through his Geneva-based Aga Khan Fund for Economic Development.

The AES-led consortium backed out of its deal to build the dam after the World Bank didn't approve US$195 million (Ђ165 million) in loan guarantees for the project. The decision by the World Bank came after AES alerted bank officials that an employee of a subsidiary of its main contractor, Oslo-based Veidekke ASA, allegedly bribed an Ugandan official.

AES withdrew from the project and wrote off US$70 million (Ђ59 million) it had invested. Environmentalists and Ugandan lawmakers have opposed the project, saying it would displace many people and submerge the Bujagali Falls, where many tourists go white water rafting. Ugandan authorities have said that the East African country will face a power crisis if the planned 1,500-meter (4,900-foot) long dam located seven kilometers (three miles) from Lake Victoria isn't built, reports the AP. N.U.