Africa, Finance, News, Small Hydro

Kikagati small hydropower station in Africa achieves financial close

The 14-MW Kikagati hydropower station being built on the border between Uganda and Tanzania has reached financial close, Emerging Africa Infrastructure Fund (EAIF) announced.

This milestone means the first tranche of debt funding has been released to Kikagati Power Company (KPC), which will own and operate the plant when construction is complete.

The announcement of the financial close of the $54 million debt finance package brings closer a new source of electricity that will be equally shared between Uganda and Tanzania.

The plant is located on the Kagera River, which is on the border between the two nations. The plant will comprise an 8.5-m-high dam of 300 m in length, plus three turbines of 5.5 MW each. 

All of the energy generated by KPC will be bought by the Uganda Electricity Transmission Company Limited, Uganda’s single-buyer and transmission organization, which will then sell half the energy on to Tanzania.

“Kikagati hydropower station is the 10threnewable energy plant that the EAIF has supported in Uganda,” said EAIF Executive Director Emilio Cattaneo. “EAIF was a pioneer in financing private sector renewable energy projects in Africa. We are helping companies and countries stimulate long-term economic development impact on business growth, jobs and skills and contributing to weakening the grip of poverty on communities.”

EAIF is lending $27 million and the Dutch development bank, FMO, has contributed the same amount. Both loans have 16-year terms. The overall cost of the project is $87 million.

KPC is backed by the Africa Renewable Energy Fund, a $205 million fund managed by Berkeley Energy.

The plant will benefit from the GetFiT program, which is funded by a number of European governments and the EU. GetFiT funding brings down the average cost of power to consumers.

This article was adapted from one previously published on the ESI-Africa website.