Financing closes for Uganda’s 250-MW Bujagali

Development partners Sithe Global Power LLC and Industrial Promotion Services (Kenya) Ltd. (IPS) announced financial closing December 21 of a US$682 million construction debt facility for the 250-MW Bujagali hydroelectric project, being built on the Victoria Nile River in Uganda.

Sithe Global of the United States and IPS, an affiliate of the Aga Khan Fund for African Development (AKFED), are owners of Bujagali Energy Ltd. (BEL), the hydro project’s development consortium. BEL formally marked the beginning of Bujagali’s construction in ceremonies August 21 at Jinja, Uganda. (HNN 8/22/07)

“This is a great tribute to public-private partnership and a just reward for sacrifices that the government has made on behalf of the people of Uganda,” Uganda Energy and Mineral Development Minister Daudi Migereko said. “The government has created an environnment that has enabled blue chip lenders and BEL to commit financing for the project while at the same time safeguarding the interests of Ugandans through the government of Uganda’s equity ownership in the project as a result of its contribution of certain valuable assets, such as land and intellectual property.”

The US$799 million Bujagali project is being undertaken as a public-private partnership between the government of Uganda and state-owned Uganda Electricity Transmission Co. Ltd. (UETCL) on one hand, and Sithe Global and IPS on the other. The private companies were chosen in an international bidding process.

Funding sourced from many nations

Multilateral and bilateral debt will be provided by the European Investment Bank, the World Bank’s International Finance Corp., African Development Bank, Nederlandse Financierings-Maatschappij voor Ontwikkelinsslanden N.V., Societe de Promotion et de Participation pour la Cooperation Economique/Agence Francaise de Developpement, DEG-Deutsche Investitions-und Entwicklungsgesellschaft MBH, and Kreditanstalt fur Wiederaufbau.

Commercial debt will be provided by Standard Chartered Bank and Barclays/Absa Capital with partial risk guarantee cover provided by the World Bank’s International Development Association.

The construction debt facilities committed for the project include US$90 million of equity being funded by Sithe Global, IPS, and the Uganda government. Sithe Global’s equity, which comprises about 65 percent of the total sponsor equity ownership in the project, is being funded by Sithe’s majority owner, the Blackstone Group, together with investment funds managed by Reservoir Capital Group and Sithe Global management. Sithe Global also has secured covered risk insurance for its equity investment with the Multilateral Investment Guarantee Agency.

IPS’ equity, 35 percent of the total sponsor equity ownership, is being funded by AKFED, Jubilee Investment Co. Ltd., and by IPS.

Additional equity is being provided by the government of Uganda.

Construction ahead of schedule

The partners said construction is two to three months ahead of schedule as a result of a US$75 million bridge loan that Uganda advanced to BEL. The funds were used by Italian contractor Salini Costruttori SpA for engineering design; detailed site investigations; construction of permanent civil works, campsite, and offices; and procurement of equipment.

The first generating unit is expected to go on line in the fourth quarter of 2010. When fully commissioned, the Bujagali will double Uganda’s effective generating capacity. BEL is to sell power to UETCL under a power purchase agreement.

Officials of the African Development Bank and the Uganda government signed a loan agreement October 26 providing US$29.7 million for construction of transmission lines and substations to link Bujagali to Uganda’s national grid. (HNN 10/30/07)

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