Uganda: Bujagali Energy-04/Bujagali

Date Filed
21 Mar 2011
Status
Open
Phase
Compliance
Country
Uganda

Case Tracker

Eligibility
Eligibility
Assessment
Assessment
Dispute Resolution
Mediation
Transferred
Compliance
Appraisal
Investigation
Monitoring
Third monitoring report issued in September, 2022. Case remains open.
CURRENT Status
Monitoring (COMPLIANCE)
Third monitoring report issued in September, 2022. Case remains open.

Complaint Overview

Complainant

Former employees of project contractor

Concerns

Worker health & safety and compensation

Cross-Cutting Issues
Risk Management Labor Community Health and Safety Coercion Loss of Livelihoods Unfulfilled Commitments IFC/MIGA Due Diligence IFC/MIGA Supervision

Project Information

Region
Africa
Institution
IFC/MIGA
Name & Number
Bujagali Energy Ltd 24408 (IFC) & 6732 (MIGA)
Company
Bujagali Energy (IFC); World Power Holdings (MIGA)
Sector
Infrastructure
Department
Infrastructure
Category
A
Commitment

$100m A & C loans (IFC), $115m guarantee (MIGA)

Synopsis

Project Overview

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 MW on the River Nile in Uganda.  Bujagali Energy Ltd. also manages the construction of approximately 100 kilometers of 132 kV transmission line on behalf of the Uganda Electricity Transmission Company Ltd. to improve the transfer of electricity from the plant.

Bujagali Energy Ltd. is owned by Industrial Promotion Services (Kenya) Ltd. – the industrial development arm of the Aga Khan Fund for Economic Development, and SG Bujagali Holdings, Ltd., an affiliate of Sithe Global Power LLC (US). IFC and MIGA are supporting the $750 million project along with several other international financial institutions, including the International Development Association, African Development Bank, and European Investment Bank.  IFC’s investment comprises $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.

Complaint

In March 2011, eleven former employees involved in the construction of the plant filed a complaint with CAO on behalf of themselves and more than 30 former employees.  The complainants claim they have not been properly compensated by the plant’s sub-contractor after they suffered injuries in the course of their work.  The complainants also raise concerns regarding the transparency of the compensation process and intimidation of workers requesting their benefits.  In total, the Bujagali Energy-04 complaint comprises 93 individual workers’ cases.  

CAO Action

CAO found the complaint eligible for further assessment in March 2011. During the assessment process, the parties agreed to address their concerns through a CAO dispute resolution process, which led to the resolution of 86 out of 93 of the individual workers’ cases, amongst other outcomes. These include the establishment of a new community-based organization to create and sustain livelihood activities for the complainants and other disabled workers; the resuscitation and strengthening of a Medical Arbitration Board, one of the mechanisms available for resolution of individual worker compensation complaints under Ugandan law; and a workshop convened by CAO in Uganda focused on strengthening company-level grievance mechanisms. In December 2013, six of the seven unresolved individual cases detailed in the complaint were transferred to CAO’s compliance function for appraisal, per CAO’s Operational Guidelines.  Considering the similarity of the issues raised, CAO decided to merge the Bujagali Energy-04 case with a subsequent case (Bujagali Energy-06) for the purposes of the compliance process.

CAO released its compliance appraisal related to the Bujagali Energy-04 and 06 cases in April 2015, which concluded that a compliance investigation was merited in relation to the two labor-related cases.  

CAO publicly released its compliance investigation report concerning the Bujagali Energy-04 and 06 cases in December, 2017.  The investigation finds that IFC was aware of labor and OSH-related risks associated with the construction of the project prior to investment.  Nevertheless, CAO concludes that IFC’s approach to the review of these issues did not meet the standard commensurate with risk. In reaching this finding, CAO notes that IFC did not possess or have access to labor and occupational safety and health (OSH) competence that was sufficient to evaluate the capacity of the client or the Engineering, Procurement & Construction (EPC) contractor to apply the provisions of PS2 to a construction project of this scale and technical complexity. As a result, IFC did not ensure that the labor and OSH-related plans of the client and the EPC contractor received appropriate technical review.

Similar shortcomings were identified during the supervision of the project. Although construction was acknowledged as involving significant OSH and labor-related risks, IFC did not resource project supervision accordingly. IFC’s ability to supervise labor and OSH-related issues was constrained by a lack of specialist staff. This was not effectively supplemented by alternative means of oversight. As a result, IFC did not have assurance that labor, health and safety risks associated with the construction of the project were being managed in accordance with its requirements.

CAO also finds that IFC did not consider whether national requirements for workers’ compensation provided injured workers with access to appropriate compensation as required under the Sustainability Framework. This finding is relevant both to the Bujagali Energy-04 complaint (where workers raised concerns about the adequacy of compensation and the process for attaining compensation) and to the Bujagali Energy-06 complaint (where the complaint was that workers’ compensation was not provided to injured workers).

In this context, CAO finds that IFC lacked assurance that project outcomes for workers were consistent with the purpose of IFC’s Sustainability Policy, which requires that adverse impacts be avoided, reduced, mitigated, and compensated for appropriately.

IFC provided a public response to the CAO investigation report in December 2017.  In accordance with CAO’s Operational Guidelines, the Bujagali Energy-04 case has remained open as CAO monitors IFC actions taken in response to the investigation’s findings.

On April 12, 2018, CAO merged a later case also concerning worker health/safety and compensation, Bujagali Energy-08, with the ongoing monitoring of the Bujagali Energy-04 and Bujagali Energy-06 cases.

On May 22, 2018, IFC shared with CAO an addendum to its management response to CAO’s Bujagali Energy 04 and 06 investigation, and the separate Bujagali Energy-07 investigation.  On June 20, 2018, IFC shared its Terms of Reference with CAO titled: Review of Available Information – Underpaid Construction Workers, Uganda Consulting Assignment.  CAO monitoring includes a review of the implementation of the actions listed in the addendum and compliance with Performance Standards. 

In March 2019, CAO published a monitoring report of IFC/MIGA’s response to the Bujagali Energy-04, 06, 07, and 08 cases.  In response to the issues raised in the Bujagali Energy-04 and 08 cases (concerning injured workers), CAO’s monitoring would review the outcomes of IFC’s scoping process once available.  CAO’s monitoring report noted delays in the implementation of actions proposed by IFC to address CAO’s findings.

In May 2020, CAO published its second monitoring report of IFC and MIGA’s response to the Bujagali Energy 04, 06, 07, and 08 cases. Since the first monitoring report, IFC completed its scoping report which included recommendations for possible additional support to injured workers. The report also identified local institutional capacity to support disabled workers and ongoing client community support programs that can be accessed by this group.  

In September 2022, CAO issued a third monitoring report. It analyzes whether IFC has adequately addressed CAO’s non-compliance findings, building on CAO’s two earlier monitoring reports issued in February 2019 and May 2020. 

IFC is initiating an Advisory Services program to support skills and capacity development for some workers injured during project construction. This action, once implemented, should partially address CAO’s findings in relation to the impacts of the project on injured workers. However, the remaining non-compliances identified by CAO and associated impacts on workers remain substantively unaddressed, including for dependents of workers who were killed.

All documents relating to this case are available under the "Case Documents" section.

Status

CAO published the third monitoring report in September 2022, and it is available in the “Case Documents” section.

Given that the Bujagali hydropower project is an active IFC project that remains in material non-compliance with IFC’s environmental and social requirements, CAO will keep these cases open in monitoring. See related cases:

Uganda: Bujagali Energy-06/Bujagali, Bujagali Energy-07/BujagaliBujagali Energy-08/Bujagali

Status as of September 19, 2022

Case Documents

  • Complaint & Assessment

    Complaint
    Letter of Complaint
    Mar 21, 2011
    English
    Letter of Complaint
    Assessment Report(s)
    Ombudsman Assessment Report
    Dec 01, 2011
    English
    Ombudsman Assessment Report
    Ombudsman Assessment Report
    Dec 01, 2011
    Luganda
    Ombudsman Assessment Report
    IFC Response, CAO Ombudsman Assessment Reports
    Feb 03, 2012
    English
    IFC Response, CAO Ombudsman Assessment Reports
  • Conclusion Report
    Conclusion Report - Bujagali Energy-04/Bujagali
    Dec 04, 2013
    English
    Conclusion Report - Bujagali Energy-04/Bujagali
  • Appraisal Report(s)
    Appraisal of IFC investment in Bujagali Energy
    Apr 08, 2015
    English
    Appraisal of IFC investment in Bujagali Energy
    Investigation Report(s)
    Terms of Reference for Compliance Investigation
    May 10, 2016
    English
    Terms of Reference for Compliance Investigation
    CAO Investigation of IFC/MIGA in relation to Bujagali
    Nov 03, 2017
    English
    CAO Investigation of IFC/MIGA in relation to Bujagali
    IFC Response to CAO Investigation Report
    Dec 05, 2017
    English
    IFC Response to CAO Investigation Report
    Addendum to the IFC Management Response to CAO
    May 22, 2018
    English
    Addendum to the IFC Management Response to CAO
    Monitoring Report(s)
    CAO Monitoring Report of IFC/MIGA
    Feb 27, 2019
    English
    CAO Monitoring Report of IFC/MIGA
    IFC Response to CAO Monitoring Report
    May 24, 2019
    English
    IFC Response to CAO Monitoring Report
    Second CAO Monitoring Report of IFC/MIGA
    May 01, 2020
    English
    Second CAO Monitoring Report of IFC/MIGA
    Second CAO Monitoring Report of IFC/MIGA
    Jun 01, 2020
    English
    Second CAO Monitoring Report of IFC/MIGA
    Third CAO Monitoring Report of IFC/MIGA
    Sep 14, 2022
    English
    Third CAO Monitoring Report of IFC/MIGA