World Bank Approves Support for Bujagali Hydropower Project (trods miljøprotester, red.) – the project shall curb black outs, encourage economic growth, and improve quality of life in Uganda
WASHINGTON, 26 April: The World Bank Group Thursday approved 360 million US dollar (henved 2 milliarder DKR) in loans and guarantees for the Bujagali Hydropower Project, an integral component of Ugandas strategy to close an energy supply gap that seriously constrains social and economic development in the East African country.
– Ugandas workforce is expected to double over the next 15 years, making the creation of jobs through expanded industry, tourism, and commercial services critical, says Judy OConnor, World Bank Country Director for Uganda.
– These sectors are energy intensive and will therefore rely on consistent, affordable, and expanding power supply. Bujagali is an important step towards realizing the needed level and quality of supply, said she.
Once commissioned (færdigleveret) in 2011, the 250 megawatt, run-of-the-river hydropower plant on the Victoria Nile will re-use water flowing from two existing upstream facilities to generate electricity.
The additional electricity will increase the supply to the national power grid at the lowest cost compared to other power generation expansion options under Ugandas energy sector strategy.
Of the total estimated project cost of 799 million dollar, the World Bank Groups support is comprised of
– 130 million dollar in loans to the private project company, Bujagali Energy Ltd. (BEL) from IFC, the private sector arm of the World Bank;
– a partial risk guarantee of up to 115 million dollar from the International Development Association (IDA) for the benefit of the projects commercial lenders; and
– an investment guarantee of up to 115 million dollar from the Multilateral Investment Guarantee Agency, the World Banks political risk mitigator (dæmper).
– IFCs investment in Bujagali Energy Limited is an important element in Ugandas strategy to develop a reliable and accessible electricity sector, which is critical for the countrys economic growth and development, says Rashad Kaldany, IFCs Director of Infrastructure, adding:
– The project will relieve power shortages and substantially reduce the need for more expensive thermal power (varmekraft).
– MIGAs guarantee, the linchpin (som det hele står og falder med) to securing part of the Bujagali equity (kapital) investment, supports the agencys overall strategy of helping Uganda address the electricity issues it is facing, says Philippe Valahu, MIGAs Acting Director of Operations.
This is the agencys third guarantee for an electricity project in Uganda in two years.
The Bujagali Hydropower Project is one element of the World Bank Groups support for Ugandas energy sector strategy.
Other elements include a Power Sector Development Operation (300 million dollar) approved separately by the World Bank Group Thursday that, among others, provides funding for a set of investments and policy measures designed to reduce the supply-demand gap until the Bujagali hydropower plant comes into service.
Support is also provided through three ongoing projects:
1) the Power IV investment project (62 million dollar) supporting improved power supply and Government capacity to manage sector reform;
2) the Energy for Rural Transformation Project (50 million dollar), which supports the development of rural areas access to renewable electricity; and
3) 40 million dollar in investment guarantees for an electricity distribution company.
On the Nile
The Bujagali Hydropower project is going to dam the Victoria Nile. The project consists of the development, construction, and maintenance of a run-of-the-river power plant on a Build-Own-Operate-Transfer basis at Dumbbell Island, eight kilometers north of the existing Nalubaale and Kiira power plants.
The projects operation will recycle the water flows released from these upstream hydropower facilities to generate additional electricity.
The project company will also manage the construction of approximately 100 kilometers of 132 kV transmission line (the Interconnection Project) on behalf of the Uganda Electricity Transmission Company Ltd. (UETCL), Ugandas national transmission company, to strengthen the evacuation of electricity purchased from the Bujagali facility.
Benefits
The Bujagali project will support Ugandas efforts to meet its electricity demand with least-cost power generation as compared to other energy options.
The daily “brown outs” experienced by hospitals, schools, businesses, and residences that have stunted Ugandas economic growth by an estimated one percent of the countrys gross domestic product, will decrease substantially with the increased electricity supply provided by the dam.
The project will be Ugandas first Independent Power Project and one of the largest mobilizations of private financing for a project of this kind in Africa.
The Bujagali Hydropower Project has undergone extensive economic, environmental, and social due diligence.
Documents made available to the public include the Project Economic Analysis – prepared by an independent consultant – and the Power Purchase Agreement. Consultations between BEL and the local communities have been ongoing throughout the project.
Bujagali Energy Limited is a joint venture between Industrial Promotion Services Ltd. (Kenya) and the US-based Sithe Global Power, LLC, which have established BEL to implement the project.
IPS (K) is the industrial development arm of the Aga Khan Fund for Economic Development—a member of the Aga Khan Development Network. Sithe is an international development company that develops, constructs, acquires, and operates strategic power assets around the world.
For more information about this project, visit
www.worldbank.org/bujagali
Kilde: Verdensbanken
