Ugandan President Yoweri Museveni has said that a controversial dam project will go ahead in spite of financial difficulties and criticism about its impact on the environment.

President Museveni said that the Bujagali dam, which would be East Africa's largest private construction project at $550 million, would be built, whether it was paid for by the World Bank or Uganda itself, in remarks reported by the Ugandan daily New Vision.

Those who don't want the dam, do they think they are dealing with a bunch of fools or people who know what is good?

President Museveni

On Tuesday, the World Bank postponed a decision to approve $250 million in political risk guarantees.

The dam, which is to be built by the US firm AES Corporation on the River Nile, has been opposed by environmental groups as it will submerge a number of rapids, affecting tourism, local cultural sites and 94 households which will be displaced.

Delays

President Museveni said that the power project, 80 km east of Kampala, would go ahead regardless.

"Those who are saying the World Bank should not give us money, like environmentalists, should know that it will be built, whether it is by the World Bank or ourselves," he said.

"Those who don't want the dam, do they think they are dealing with a bunch of fools or people who know what is good?"

The construction of the dam, which has been in the planning for the last seven and a half years, is supposed to start within two months, after numerous delays.

These have to do with environmental groups, but also with financial aspects.

An internal World Bank report leaked to the press last week suggested there are some problems with the project, not least over the money Uganda will have to pay AES over the next 30 years.

Shortages

The power company AES had asked for the postponement to finalise negotiations with contractors on insurance.

"We requested the World Bank to delay the meeting to approve the political risk guarantee for the project because we have had to renegotiate with the dam contractors," a spokeswoman for AES Corporation, Sara Birungi, told Reuters news agency.

"We expect that within the next few weeks we should reach agreement," she said.

The consortium building the dam for AES, which will be the owner and operator of the project, includes five firms based in Sweden, Norway, France and the United States.

The power generated by the dam is supposed to help alleviate the country's electricity shortages.

Only 3% of Uganda's 23 million people have access to electricity.