After more than a decade of planning the Bujagali Hydropower Project is finally set to take off.
A statement from the World Bank Group says 360 million dollars in investment of loans and guarantees for the project took effect this week as the project's private sponsors and lenders reached financial closure. Interest rates and contract terms for the project were locked in, allowing the construction to take effect.
Grace Yabrudy, the World Bank Uganda Country Manager, welcomed the close of contract negotiations between Bujagali Energy Limited and the project's commercial investors. He said it is an example of partnerships that can make a real difference in Uganda's development.
The 250 Megawatt project on the Nile River is an integral component of Uganda's strategy to close an energy supply gap that seriously constrains the country's social and economic development. Yabrudy noted that 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 Uganda's energy sector strategy.
The World Bank Group's support comprises 130 million dollars in loans to Bujagali Energy Limited from the International Finance Corporation. A partial risk guarantee of up to 115 million dollars will come from the International Development Association for the benefit of the project's commercial lenders; and an investment guarantee of an additional 115 million dollars has been provided by the Multilateral Investment Guarantee Agency, which is the World Bank's political risk mitigator.
The Bujagali Hydropower Project is one element of the World Bank Group's support for Uganda's energy sector strategy. Other elements include a Power Sector Development Operation that provides funding for investments and policy measures designed to reduce the supply-demand gap until the Bujagali hydropower plant comes into service.