600 workers at Isimba Dam in Kayunga district have gone on strike.
The workers laid down their tools on Thursday morning to protest a pay cut in their wages.
The workers, who spoke to Uganda Radio Network on condition of anonymity, say they received new contracts this month that show their wages have been slashed.
Before the new contracts, the workers were receiving 210, 000 shillings a month.
The new contracts indicate they will be earning between 120, 000 shillings to 150, 000 shillings a month.
Only last month, workers staged a strike over non-payment of their salaries and allowances and poor working conditions.
Close to 200 workers accused the management of China International Water and Electric Corporation, which was contracted to build the dam of failing to provide them with protective gears such as gum boots, helmet and gloves.
The most affected were casual laborers, potters, bush clearers, lorry drivers, guards and supervisors.
The workers also demanded a pay rise given the depreciation of the Shillings, which has affected commodity prices; by then, they were earning between Shillings 200,000 and 600,000 monthly.
In February 2015, the 600 local workers petitioned the Speaker of Parliament, Rebecca Kadaga, over mistreatment.
Soka Stephen, one of the lead workers, told Kadaga, Energy Minister Hon. Irene Muloni and Chinese Ambassador to Uganda, H.E Zhao Yali, that they were being paid Shs 6500 per day paid to the local labour force.
In her response, Speaker Kadaga rallied all contractors to improve the working conditions of the local population that they employ.
Ambassador Yali attributed misunderstandings between the workers and contractors to miscommunication.
Energy Minister Muloni said the dam once completed will produce over 183 megawatts of hydroelectricity and boost industrialization in the two districts of Kamuli and Kayunga.
In July 2015 still, President Yoweri Museveni visited the dam at Nampanyi village in Busana Sub-county, to witness the construction progress.
The project will cost USD 567,738,990.96 financed by the government of Uganda and concessional loan from the Export-import Bank of China.
The 188MW Isimba hydropower project is one of the most important hydropower projects that the Ugandan Government has initiated on the River Nile, to ease the severe power shortages in Uganda, and accelerate the development of local economy.
Considered to be the fourth biggest hydropower project in Uganda, it is expected to generate hydroelectric power at 68 cents per kWh, the lowest in East Africa.
It is expected to generate 1,039GWh of electricity a year and increase the country’s total electric capacity by 23%.