The Bujagali Energy project involves the development, construction, and maintenance of a run-of-the-river power plant with a capacity of up to 250 megawatt (MW) on the River Nile in Uganda. Bujagali Energy Ltd. (BEL) also manages the construction of approximately 100 kilometers of 132 kilovolt (kV) transmission line on behalf of the Uganda Electricity Transmission Company Ltd. (UETCL) to improve transfer of electricity from the plant. IFC’s investment comprises US$100 million in A and C loans, and MIGA issued a $115 million guarantee to World Power Holdings Luxembourg S.à.r.l., a subsidiary of Sithe Global Power, for its investment in the project.

In February 2015, CAO received a complaint submitted by four community members residing in the Bujagali affected area on behalf of themselves and over 200 other community members, citing concerns related to inadequate compensation for crops damaged by project activities.

In February 2015, CAO found the Bujagali Energy-07 complaint eligible for assessment. During the assessment and further extension, the parties did not reach an agreement about engaging in a dispute resolution process. In accordance with CAO’s Operational Guidelines, the case was referred to CAO’s Compliance function for appraisal. 

In November 2016, CAO completed its appraisal, and CAO concluded that an investigation was warranted in relation to this complaint. Due to the advance of parallel complaints related to labor issues, the issues raised in the Bujagali Energy-07 case were considered in a separate investigation from the Bujagali Energy-04 and 06 investigation. 

In January 2018, CAO published its Compliance Investigation Report, which found that IFC and MIGA correctly identified the interconnection project as an associated facility of the hydropower project, which required applying the 2006 Sustainability Framework and committing UETCL to work with IFC’s client to implement the project according to IFC’s Performance Standards.

However, the investigation found that IFC did not ensure the Resettlement Action Plan (RAP) for the transmission line met the requirements of Performance Standard (PS) 5. Specifically, IFC lacked assurance that the RAP's compensation framework met IFC’s standards for full replacement cost, was disclosed to and consulted with affected communities, or addressed government capacity gaps for effective implementation.

Weaknesses in the RAP led to challenges during project implementation, with the grievance mechanism unable to handle complaints about land acquisition. Despite systemic compensation complaints, IFC and other financiers responded ad hoc rather than reviewing the RAP's adequacy. The required completion audit of the resettlement process was not conducted, leaving IFC without assurance that compensation met full replacement cost requirements, resulting in likely inadequate compensation for many affected households.

In January 2018, IFC provided a management response to the CAO investigation report. In accordance with CAO’s Operational Guidelines, the case remained open and CAO monitored IFC actions taken in response to the investigation findings.

In May 2018, IFC shared an addendum to its management response to the CAO investigation report for the Bujagali Energy-04, 06, and 07 cases. On June 20, 2018, IFC provided CAO with its Terms of Reference for the "Bujagali Interconnection Project (BIP) Land Acquisition Completion Report Gap Analysis (Task 1) and Supplemental Completion Report (Task 2) Consulting Assignment."

CAO Monitoring Reports

In March 2019, CAO released its First Monitoring Report of IFC/MIGA’s management response to the Bujagali Energy-04, 06, 07, and 08 cases. For the Bujagali-07 complaint, CAO awaited the completion of IFC's gap analysis and resettlement completion report. CAO emphasized the need for IFC’s report to address livelihood restoration and compensation for affected assets, such as crops, at full replacement cost per PS5. The monitoring report highlighted delays in IFC's implementation of actions to address CAO's findings.

In May 2020, CAO released its Second Monitoring Report. CAO acknowledged IFC’s Task 1 report finding that identified gaps in the existing completion reports against PS5 (2006) requirements, particularly in restoring livelihoods for affected individuals. Task 1 recommended the preparation of Task 2: Supplemental External Completion Report. CAO noted limited progress in Task 2's preparation and implementation, stressing the importance of securing government support for its completion.

In September 2022, CAO released its Third Monitoring Report. The report built upon earlier assessments from February 2019 and May 2020. Despite noting some actions by IFC, CAO concluded that the non-compliance findings and resulting adverse impacts on complainants have not been adequately addressed.

CAO acknowledged IFC’s intention to review the resettlement process for the Bujagali transmission line in accordance with project agreements and IFC PS. Despite UETCL's stance that a Supplemental Completion Report or Corrective Action Plan is unnecessary given the findings from the African Development Bank’s Independent Recourse Mechanism, the project remained non-compliant with IFC’s Performance Standards. Additionally, the report indicated that if IFC did not fulfill its commitments made during the project's refinancing in 2018 to address CAO’s findings, the likely underpayment of compensation to affected households identified by CAO would persist without resolution.

In May 2024, CAO published its Fourth Monitoring Report. CAO found IFC’s response to its non-compliance findings on inadequate land compensation unsatisfactory. Since June 2021, IFC has not taken additional steps to rectify these issues, potentially resulting in households affected by the transmission line construction receiving insufficient compensation.

CAO highlighted IFC’s view that project lenders have limited influence to enforce Environmental and Social (E&S) requirements outlined in the Direct Agreement with UETCL, such as the final resettlement audit and corrective action plan. Despite acknowledging the enforceability of these requirements under English law, IFC has not pursued arbitration to enforce them.

As the Bujagali hydropower project remains active and IFC has not resolved the non-compliances and related impacts raised by the complainants, CAO will continue to monitor this case.

CAO’s Omnibus Monitoring Report which includes the monitoring report for this case, is available in English.