Ugandas Bujagali Hydropower Project to curb black outs, encourage economic growth, and improve quality of life
WASHINGTON, 21. December: The World Banks 360 million US dollar investment of loans and guarantees for Ugandas Bujagali Hydropower Project took effect this week as the projects private sponsors and lenders reached financial closure.
The 250 Megawatt project on the Nile River is an integral component of Ugandas strategy to close an energy supply gap that seriously constrains the East African countrys social and economic development.
World Bank Uganda Country Manager Grace Yabrudy: – Bujagali will bring a more reliable and accessible power supply that will help create jobs, reduce poverty, and improve quality of life.
Once commissioned in 2011, the run-of-river hydropower plant will re-use water flowing from two existing upstream facilities to generate additional 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.
The World Bank Groups support comprises 130 million dollar in loans to the private project company, BEL from IFC; a partial risk guarantee of up to 115 million from the International Development Association for the benefit of the projects commercial lenders; and an investment guarantee of up to 115 million from the Multilateral Investment Guarantee Agency, the World Banks political risk mitigator.
– The Bujagali Hydropower Project 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:
– IFC is pleased that work on the project has commenced, as it is expected to reduce power shortages as well as CO2 emissions in Uganda, thus lessening the need for more expensive thermal power.
– MIGAs guarantee, the linchpin to securing part of the Bujagali equity investment, supports the agencys overall strategy of helping Uganda address the electricity issues it is facing, says Edith Quintrell, MIGAs Director of Guarantees. This is the agency’s third guarantee for an electricity project in Uganda in two years.
The Bujagali Hydropower Project is one element of the World Banks support for Ugandas energy sector strategy. Other elements include a Power Sector Development Operation (300 million dollar) that 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: the Power IV investment project (62 million) supporting improved power supply and Government capacity to manage sector reform; the Energy for Rural Transformation Project (50 million), which supports the development of rural areas access to renewable electricity; and 40 million in investment guarantees for an electricity distribution company.
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, please visit www.worldbank.org/bujagali
Kilde: Verdensbankens website
