Consultant report: 250-MW Bujagali to end Uganda load shedding

A consultant’s report to the International Finance Corp. (IFC) finds that completion of the 250-MW Bujagali hydroelectric project by 2011 should reduce the average cost of electricity by 10 percent and bring an end to load shedding in Uganda.

In a report commissioned by the IFC, Power Planning Associates Ltd. (PPA) of the United Kingdom concluded, under a base case scenario, that the Bujagali project, proposed for the Nile River in Uganda, would be part of the least-cost expansion plan for power generation in Uganda. It also said the project was a better choice economically than the competing 250-MW Karuma hydro project site.

The report, completed in February, is a comprehensive update of economic and hydrologic data since the withdrawal of Bujagali’s previous developer, AES Corp. of the United States. The project now is being developed by Bujagali Energy Ltd., a consortium led by Industrial Promotion Services (Kenya) Ltd., a member of the Aga Khan Development network, and Sithe Global of the United States. It is expected to go on line in 2011.

The IFC, an affiliate of the World Bank, plans to decide in a matter of months whether to approve funding for the project. (HNN 3/1/07) Director Rachel Kyte of IFC’s Environmental and Social Development Department, previously said financing is expected to be in place by mid-year.

PPA said, under the more-likely low hydrology conditions, Bujagali would generate 1,165 gigawatt-hours per year, while under high hydrology conditions, it would generate 1,991 GWh per year.

�The main results showed that Bujagali commissioned in 2011 was part of the least-cost program under all demand forecast scenarios with the low hydrology, and also for the high and base demand with high hydrology,� PPA said.

The report simulates a set of least-cost expansion plans without Bujagali, including the Karuma site as a candidate plant from 2012, considered its earliest feasible commissioning date. Compared to those �without Bujagali� scenarios, the expansion plans that include Bujagali yield an economic advantage in favor of Bujagali of US$184 million in net present value terms, the report said.

�After the commissioning of Bujagali in 2011, the average cost of supply to end-users should drop by up to 10 percent compared to prevailing prices in constant money terms,� the World Bank said, citing the PPA report.

The report found a small, but positive, effect on economic growth, balance of payments, and fiscal balance, compared to other scenarios.

�There will be an immediate positive impact from Bujagali in 2011 resulting from the balancing of supply and demand, and therefore an end to load shedding,� the PPA report said. �The main macro-economic impacts will be provided through power sector investments, which will add a maximum 0.3 percent to GDP (gross domestic product) in 2009.�

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