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Museveni, Aga Khan set to launch Bujagali

As part of the activities to celebrate 50 years of independence, President Museveni and His Highness the Aga Khan are expected to officially inaugurate the just-completed Bujagali hydropower project.

According to Mahmood Ahmed, the Resident Representative of the Aga Khan Development Network, the 250 megawatt Bujagali hydropower project will be inaugurated on the eve of the country’s Golden Jubilee, on October 8. Bujagali hydropower project is the work of a public-private partnership (PPP) model between the government of Uganda and a consortium involving the Aga Khan Fund for Economic Development.

The consortium formed the Bujagali Energy Limited (BEL), which will own and operate the power plant for a 30-year concession. The plant will then become a government asset after being handed over for $1. Dr Kevin Kariuki, head of infrastructure in Aga Khan’s Industrial Promotion Services, says, the dam can generate even more electricity than the projected 250 megawatts.

“The dam can generate 270 megawatts,” Dr Kariuki told journalists at Kampala Serena hotel last Friday.

Dr Kariuki hailed the important role the Uganda government played in ensuring that the project is implemented on time. In May 2007, government extended a Shs 90m loan to the BEL to expedite the construction. The developers paid back the loan. In total, says Dr Kariuki, $860m has been spent on the project. Bukenya Matovu, the head of communication in the Energy and Mineral Development ministry, said the dam had doubled Uganda’s electricity supply. He added that the power plant currently meets 49% of the country’s energy requirements.

Uganda’s electricity demand has been growing at an annual rate of approximately 10% in recent years. This has led to demand exceeding supply, something that triggered frequent load-shedding. Now, with a significant increase in power generation and energy, the project has virtually eliminated load-shedding and replaced the entire emergency thermal generation, Matovu noted.

“This will spur economic growth and considerably improve the lives of Ugandans,” Ahmed added.

A statement from BEL says over 3,000 jobs were created at the peak of the construction. BEL is to sell the energy generated to the Uganda Electricity Transmission Company Limited at 10 US cents/kwh. The cost is expected to go down substantially after the expiry of the concession.

Turbulent past

Bujagali’s completion and inauguration brings to an end one of Uganda’s most controversial public projects. Back in early 2000, the project hit headlines after the Sixth Parliament questioned government’s commitment towards protecting the environment. Little wonder, President Museveni has often blamed the Sixth Parliament for the delay in the construction of the dam.

However, it was not entirely their fault. As politicians debated and bribery allegations emerged, AES, an American energy company which was to lead the construction, pulled out in 2001 after experiencing some financial challenges at home. In 2006, Bujagali got new developers, the Aga Khan Fund for Economic Development, who formed BEL. Aga Khan’s Industrial Promotion Services together with Sithe Global Power embarked on the project.

Loans from the World Bank, European Investment Bank, Netherland’s FMO, African Development Bank and France’s PROPARCO, among others, bolstered the project. Also involved in the project was Industrial Promotion Services (Kenya) Limited and SG Bujagali Holdings Ltd, an affiliate of Sithe Global Power, LLC (USA).

Bujagali hydropower project, Dr Kariuki notes, has been approved as a Clean Development Mechanism (CDM) by the executive board of United Nations Framework Convention on Climate Change (UNFCCC). As a CDM project, it could earn about $17 million per year from selling certified emission reduction (CER) credits to industrialised countries as part of their emission reduction targets under the Kyoto Protocol of the UN framework Convention for climate change, he explained. Under the deal, the Uganda government would receive 60% of the carbon credit income while 40%l goes to BEL.


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