Blog / 30 October 2009

Waiting for the Bujagali dam

Waiting for the Bujagali dam

Once inside, we have plenty of time to talk to Ogwan, because his machines are not in operation. Just a few minutes before we met him, the energy company cut his power off because he could not pay the bills. "We have been cut off", says James with a smile. In the corner, three of his employees are sleeping. "I need to sell some first, before I can make more flour. If I sell 50 bags, I have just enough money to produce another 50 bags, but I make almost no profit." James owes the energy company 22 million shillings and sells his flour for about 1000 shillings a kilo (some 35 Euro cent).

But it's not just the cost of energy that has a negative impact on local businessmen's profit margins. In order to keep their stock intact, they have to procure their corn from all over the country. Because the rainfall pattern in Uganda has changed, crop failures are now a frequent occurrence. "It has an effect on my business," admits James. "Sometimes the rains don't come and sometimes there is so much rain that the ground and crops just wash away. When harvests fail in the east, I have to get the corn from the west of the country, and if it fails there I get it from the east. This affects my profits."

The energy price in Uganda is one of the highest in the region. The country does not produce enough energy for its growing economy. Prices are high and sometimes the power is cut off. Small businessmen, who depend on a cheap and steady supply of power, are setting their hopes on the Bujagali hydro energy dam that is being built near Jinja. Power prices should drop when the dam goes into operation. "When the dam is finished we will be provided with cheap energy," James confirms.

Experts question whether the dam will live up to the expectations of Jinja's businessmen, however. The costs of the dam have been rising and Bujagali is becoming one of the most expensive dams in the world. Because of this, the power costs in Uganda may actually rise instead of falling, once the Bujagali dam goes operational. "It is a bad project, over delayed, and overpriced. If I had been there (as Minister of Energy), I would not have allowed (the) poor negotiations for this project," incumbent Energy Minister, Hillary Onek, said in the The New Vision, Uganda's leading newspaper. If energy costs do rise when the dam is completed in 2011, the corn millers in Jinja face even tougher times: "If that happens, I can't make a profit anymore," says James: "I would have to close my business." But for now, the businessman remains optimistic about the energy that the dam will provide: "If you come back in 10 years' time, you'll see a lot of well run small factories here and one big factory, mine!"

Added by Thomas Hurkxkens, lokaalmondiaal



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