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Uganda, Bugoye Hydro Power

Delivering 13MW of clean, run-of-river hydro power to the people of rural Uganda; creating jobs and stimulating economic growth

The Bugoye Hydro Power Plant harnesses the enormous power of the Mubuku River, which gathers the waters running down the Rwenzori mountains in Kasese, in the west of Uganda. The plant is a pure run-of-river hydro power plant with a capacity of 13MW, and an annual mean generation of 82GWh, feeding its energy into the main grid at the Nkenda Substation via a 6km long, 33kV transmission line.

BACKGROUND

Uganda has one of the lowest rates of per capita energy consumption in the world, with barely 6% of the rural population having access to electricity. The country has substantial natural resources, including: fertile soils, regular rainfall, copper, cobalt, crude oil and natural gas. Uganda has seen significant economic growth in recent years, underpinned by continued investment in the rehabilitation of infrastructure, better incentives for production and exports, reduced inflation and improved domestic security.

In spite of this, economic growth in Uganda is constrained by a lack of access to affordable, reliable electricity. The population experiences significant power shortages exacerbated by periods of localised drought. The Government has sought to address the problem by commissioning emergency diesel generators,however, the high costs involved have seen retail prices more than double. The Bugoye project is fully aligned with one of the Government of Uganda's key priorities: to urgently develop new power generation capacity in the country.

THE DEAL

A consortium was formed to provide a total investment of US$65.7m to build the hydro power plant.  Domestic Ugandan private sector sources provided US$3.92m, and the Norwegian Government made a grant of US$8.9m. The Emerging Africa Infrastructure Fund ($US33m) played a significant part through its 15-year senior loan, while Norfund (US$6.3m) and the commercial sponsor Tronder Energi (US$13.4m) both made equity contributions to the project.

PIDG POSITION

The Emerging Africa Infrastructure Fund (EAIF) was the lead financial arranger, prepared to invest substantially at a time when no one else would. EAIF and their advisers worked closely with the sponsors to assemble the consortium and to finalise the project development. EAIF and FMO are currently financing a similar 18MW run-of-the-river hydro power project in Mpanga, western Uganda.

DEVELOPMENT IMPACT

Private Sector investment

Total investment committed

 

US$65.7m

Fiscal benefits

Bugoye has reduced dependence on the diesel-powered generation of energy; approximately $13m a year of government subsidies to diesel-powered generation is expected to be avoided as a result of this project.

The plant’s ‘Island Mode’ supply has significantly improved the prospects of local businesses, who face daily power cuts, enabling them to increase production.

Job creation

Short Term

Long Term

 

500 people

10 people

Additional Benefits

The Bugoye Hydro Power Plant (BHPP), operational since September 2009, harnesses natural resources and provides renewable, sustainable power for a badly under-resourced region.

BHPP is designed to continue to supply the local network when the national grid is down, providing a stable and reliable electricity supply. Almost one million additional people are served with power, of which over 300,000 are below the poverty line.

During construction, access roads and footbridges were built – a long-term developmental legacy, given the previous state of roads and bridges.

Substantial Corporate Social Responsibility initiatives were also delivered, such as: the upgrade of a clinic; malaria & HIV/Aids programmes; and tree planting to protect the watershed.