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

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 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 out of the seven unresolved individual cases detailed in the complaint were transferred to CAO’s compliance function for appraisal, in accordance with 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 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 with CAO its Terms of Reference 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 will review the outcomes of IFC’s scoping process once available. In this context it will be important to ensure that IFC’s response addresses concerns regarding the adequacy of compensation provided to workers seriously injured and the families of those killed during the construction of the project, considering the requirements of Ugandan law and the IFC Performance Standards. CAO’s monitoring report notes delays in implementation of actions proposed by IFC to address CAO’s findings.

 

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 March 6, 2019

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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