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Uganda, SAEMS-Mpanga Falls Hydro Power

Harnessing Uganda's hydro power potential to deliver sustainable power for over 800,000 people.

The SAEMS-Mpanga Falls Hydro Power Project saw the financing of an 18MW hydro power plant at the Mpanga Falls in the Kasese region of western Uganda. The Project has delivered access to quality renewable energy for 816,000 people.

BACKGROUND

In spite of heavy government subsidising of the power sector, Uganda continues to experience severe energy rationing. Much of the country's population relies upon expensive emergency diesel generators. However, Uganda's powerful rivers can play a key role in bringing sustainable power to everyone.

The US$27 million hydro power plant on the Mpanga River became fully operational in mid-2011. The 18MW plant improves grid stability, and produces cheaper electricity for customers. Power from Mpanga Falls also partly replaces demand for power from rented diesel-fired plants. Mpanga's cleaner energy offers a cost saving to the Government of Uganda and the World Bank who heavily subsidise this emergency diesel power generation.

THE DEAL

The Mpanga River hydro power plant is one of a portfolio of 13 small hydro power (SHP) projects located in Sri Lanka and Uganda with a combined generation capacity of 70MW. They are being developed, owned and operated by South Asia Energy Management Systems (SAEMS), a US-based renewable power developer, and require a total investment of US$110 million. US$38 million of this has been raised in the form of equity investment by the project sponsor, and the balance US$72 million in the form of long-term debt from a consortium of DFIs including EAIF. The power generated by Mpanga Hydro is purchased by the Ugandan Electricity Transmission Company Limited (UETCL), under long-term power purchase agreements.

PIDG POSITION

PIDG company EAIF has provided US$14 million specifically earmarked for the Ugandan project. This type of long-term financing was not available from the Ugandan domestic capital markets or local banks. The success of the project has had a significant demonstration effect, with EAIF approving an additional loan amount of US$6 million to SAEMS in 2012 for a second hydro power plant (Nyamwamba Hydro), to be built in Kilembe in western Uganda, following the same model.

DEVELOPMENT IMPACT

Private Sector investment

Total commitments

 

US$24m

Fiscal benefits

Estimated contribution to government revenues through taxes – US$1 million per year – while also reducing the subsidy it provides in emergency power generation.

Economic growth is constrained when power is absent or unreliable, and this plant reduces ‘load shedding’ (energy rationing), improves grid stability and reduces the cost of electricity generation

Job Creation

Construction

Operational

 

100 people

33 people

Additional Benefits

The plant will deliver a much improved power service to 816,000 people, supporting rural electrification programmes currently underway in the region.

Improving the energy infrastructure is an important point of focus for the Government of Uganda, and is in line with the National Poverty Reduction Strategy.

The site is home to the largest known single population of the spectacular cycad plant (Encephalartos whitelockii), which is highly threatened and facing extinction. In collaboration with the project developer, a nursery was funded to replant this unusual cycad species, and an awareness campaign was launched among local people to conserve the rare plant