The Panel received a Request for Inspection on June 20, 2016, case no. 110, which related to the Bank-financed Uganda Private Power Generation (Bujagali) Project, the Water Management and Development Project (WMDP) and the Energy for Rural Transformation Phase III Project (ERT-III). On September 19, 2016, the Inspection Panel received a second Request for Inspection related to the same projects.
The complainants raised concerns about potential social and environmental harm caused by the construction of the Isimba Dam and the consequent flooding of the Kalagala Offset Area (KOA). While the World Bank is not financing the dam, the complainants alleged the flooding will undermine the management of protected natural resources in the KOA, which is a requirement of an indemnity agreement between the International Development Association and the government of Uganda as part of the Bujagali project. The Panel registered both complaints in September 2016, and informed the Board of Executive Directors that since they raised similar issues the Panel would process them jointly.
Management, in its response of October 31, 2016, argued the Requests were ineligible on several grounds. It stated the potential harm alleged by the Requesters does not stem from a Bank-supported project, but is related to the development of the Isimba Dam, which is not financed by the Bank and, as a result, cannot be subject to Panel review. Management also contended that the Bujagali project is completed and, as such, not eligible for Panel review. It further stated that the two other projects do not relate to the harm alleged in the Requests. Finally, management stated that the issues raised in these Requests were addressed in the Panel’s recommendation relating to prior requests in 2001 and 2007.
The Panel on December 16, 2016, recommended to defer by up to one year its decision on whether an investigation of the three projects was warranted. The Panel stated deferring its decision would allow it to wait for the completion of the Environmental and Social Impact Assessment (ESIA) addendum that Bank management was preparing and follow-up actions by the Bank. On April 4, 2017, the Board approved the Panel’s recommendation to defer its decision regarding WMDP and the ERT-III but found that the Bujagali project was not eligible to be investigated because the project was closed.
On May 3, 2018, the Panel sent to the Board its Second Report and Recommendation that recommended an investigation of the alleged issues of harm and related potential non-compliance plausibly linked to the two projects. In making that recommendation, the Panel noted the importance of investigating the timing and adequacy of management’s actions in response to the government of Uganda’s decision to build the Isimba Dam, which threatens the integrity of the KOA in potential non-compliance with the Kalagala Offset Sustainable Management Plan under the WMDP. The Panel also noted that the timing, sequencing and adequacy of the ESIA addendum could constitute potential non-compliance with Bank policies on Environmental Assessment and Natural Habitats, among others.
The Board approved the Panel’s recommendation to investigate on September 19, 2018, and a Panel team conducted its investigation visit to Uganda in November 2018.
The Panel submitted its Investigation Report to the Board on May 2, 2019. Following the Board’s October 2018 approval of new tools for the Panel, which included sharing the Investigation Report with Requesters prior to Management’s consultation on the Action Plan, the Panel, for the first time, implemented this tool and shared the report on a confidential basis. Management’s Report and Recommendation responding to the Panel’s findings was submitted on July 3, 2019.
The Board met on December 3, 2019, to consider the Panel’s report and to approve the Management Action Plan in response.
The Panel’s investigation found the World Bank in non-compliance with its policies on Environmental Assessment, Natural Habitats, Project Supervision and Investment Project Financing, observing that the Bank did not address funding and capacity constraints to ensure the maintenance of the KOA. The Panel also found that the Bank-funded addendum to Isimba’s ESIA was completed too late to influence the design of the dam and improve decision-making. The Panel also expressed concern about the decision to offset the KOA by establishing an extended offset area, stating that mitigating the partial loss of one offset by creating another undermines the credibility of the offset concept and has reputational risks for the Bank. The impact of the establishment of the extended offset, particularly on livelihoods, was neither properly assessed nor mitigation measures developed in line with Bank policies, according to the Panel.
The Board approved the Management Action Plan, which details how the World Bank and Uganda will work together to protect the extended KOA. According to Bank management, the government of Uganda had committed to (i) declare the extended KOA as a Special Conservation Area under the National Environment Act, (ii) prepare and adopt a management plan for the extended KOA in close consultation with the Bank, and (iii) prepare and adopt a livelihood restoration plan and possible resettlement action plan. The Bank committed to monitor the implementation of these plans through 2023 when the Bujagali guarantee expires.