Construction on the Bujagali Falls hydroelectric project will be delayed as AES Corp. faces a financing shortfall and a plunging stock price, Bloomberg News reported Thursday.

The news comes only two months after the World Bank approved a $175 million loan to the project. AES had counted on agencies in Sweden, Finland, Norway and Switzerland to guarantee additional loans of $250 million, but so far only Switzerland's agency has agreed, AES executive Vice President Mark Fitzpatrick told Bloomberg.

The Swedish Export Credits Guarantee Board, an agency known as EKN, refused AES's application, according to a memo given to Bloomberg by International Rivers Network (IRN), a California-based environmental NGO opposed to the dam.

"We are all a bit embarrassed by these events so late in the day," Fitzpatrick told Bloomberg.

Earlier this month, AES announced it would gradually cut its workforce at Bujagali by 90%. The new AES Country Director and Construction Manager, John Lockwood told The Monitor at the time that the scale down would not affect the company's operations but would enhance efficiency. Some of the terminated employees have recently claimed AES fired them without notice nor benefits, contrary to their contracts.

The news of the construction delay was so sudden that Edith Ssempala, Uganda's ambassador to the United States, was first told the news by The Monitor Thursday night. However, she was not completely surprised.

"That has been my fear," Ssempala said, noting the recent heavily reported financial difficulties of the Virginia-based power company. She said she planned to contact AES Friday "to see what can be done."

Fitzpatrick predicted the construction start could be delayed by two to four months. AES executives said they will now work harder to convince the export banks to support the project.

"I am very optimistic that something better will come out," Ssempala added. "I know AES is committed to the project, but obviously they are having difficulties now."

AES's recent financial problems stem from a number of factors. Earlier this month, the firm announced that fourth-quarter profit had plunged 80%. More recently, Moody's Investors Service put AES's long-term debt on review for possible downgrade. AES has a total of US$22.3 billion in debt. A downgrade by Moody's would mean higher interest rates and the requirement to post more collateral at some units. AES's debt rating is already quite low.

In response, the company announced Tuesday a restructuring plan which included selling between US $1 billion and US $1.5 billion in assets. But investors continued to be wary, and AES's share price is off more than 90% from its year-earlier price.

While AES's debt and profit drop are longstanding problems, the company's recent financial brownout has also been caused by an unlucky confluence of developments in the business world. The collapse of Enron has burned the entire U.S. energy sector. It has also made investors particularly leery of companies with mystifying accounting practices. AES has been notorious for just that, although the company has made a push to be more open over the last few weeks, to stave off the flight of anxious investors.

Furthermore, AES has about $1 billion invested in Argentina, where a recent economic crisis has caused AES's operations there to suffer cash-flow shortfalls and defaults on project financing.

Ssempala emphasized that AES's troubles are not its fault, but merely reflective of the current economic climate.

"AES has been have been a very successful, credible company," Ssempala said. "There are no reports that have spoken against their integrity. Hard luck comes to all of us. I've been talking to people, and I hadn’t heard anyone saying their problems are due to bad management."

However, critics have lambasted the Bujagali project for its high cost, its potential impact on whitewater-rafting tourism, its reliance on expensive hydroelectric power over potentially cheaper, more-environmentally-friendly alternative energy sources, and other factors.

Ssempala still rejects these criticisms, and she blamed them for the previous project delays.

"Uganda would be hurt if the project was called off," she said. It is something we have been negotiating for a very long time. If had not had difficulties we had, with people decampaigning and undermining our project, by now we would have energy."

AES officials could not be reached for comment. The International Finance Corp., the World Bank unit that lends to private companies including the AES project in Uganda, declined The Monitor's request for a comment.