CAO Cases

Arne Hoel, The World Bank

Sub-Saharan Africa

Uganda / Bujagali Energy-04/Bujagali

Complainant
Former employees of project contractor
Date Filed
March 21, 2011
Concerns
Worker health & safety and compensation
Case Status
Open - Compliance
 

Synopsis

Complaint
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 Limited also manages the construction of approximately 100 kilometers of 132 kV transmission line on behalf of the Uganda Electricity Transmission Company Ltd. to improve transfer of electricity from the plant.

 

Bujagali Energy Limited 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.

 

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.

 

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 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 cases under Ugandan law; and a workshop convened by CAO in Uganda focused on strengthening company-level grievance mechanisms. In December 2013, six out of the seven unresolved cases were transferred to the CAO compliance function for appraisal.

 

In April 2015 CAO decided to conduct a compliance investigation in relation to two labor related complaints regarding the Bujagali project (Bujagali-04 and -06).

 

CAO released its compliance investigation report concerning both complaints on December 12, 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 of being commensurate to 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 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 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-04 complaint (where workers raised concerns about the adequacy of compensation and the process for attaining compensation) and to the Bujagali-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.

 

All documents relating to this case are available under "View Documents" below.


Status

As per CAO's Operational Guidelines, this case will remain open as CAO monitors IFC's response to the findings.

 

Status as of December 12, 2017

Project information

Institution
IFC & MIGA
Project Name & Number
Bujagali Energy Ltd 24408 (IFC) & 6732 (MIGA)
Department
Infrastructure
Company
Bujagali Energy (IFC); World Power Holdings (MIGA)
Sector
Utilities
Region
Sub-Saharan Africa
Country
Uganda
Environmental Category
A (IFC)
Commitment
$100m A & C loans (IFC), $115m guarantee (MIGA)

Case Tracker

Ombudsman

  • Eligible: Completed
  • Assessment Period: Completed
  • Facilitating Settlement: Transferred

Compliance

  • Under Appraisal: Completed
  • Under Audit: Completed
  • Monitoring: In Process

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