Uganda allots US$53.3 million for Nile hydro projects

Uganda’s Finance minister says the government will use 99 billion shillings (US$53.3 million) to launch an energy fund tasked with building two hydropower projects on the Nile.

Finance Minister Ezra Suruma delivered his budget speech June 15, saying Uganda will spend a total of 202 billion shillings (US$108.9 million) in 2006-2007 to tackle a worsening power crisis that has undermined economic growth. The east African nation has suffered crippling electricity shortages for months.

In April, the World Bank advised Uganda to build the cheapest of two proposed hydropower plants on the Nile first, the 250-MW Bujagali Falls project, instead of rushing to meet a growing power deficit by also trying to simultaneously build another dam farther downstream, 200-MW Karuma.

President Yoweri Museveni has blamed the power shortfall on “meddling” foreign donors who he says rejected plans to build two dams at the same time. Guests at Museveni’s State of the Nation speech groaned this month when he said both hydro projects would be up and running in only about 3.5 years.

In addition to the proposed hydro project spending, a further 70 billion shillings (US$37.7 million) would be used to install more thermal generators in the capital Kampala. Suruma also said the government would allow power generating and power distributing companies to defer loan repayments to the government worth 33 billion shillings (US$17.8 million) in 2006-2007.

“The development of immediate generating capacity is a critical focus of this year’s budget,” he told parliament.

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