An official of the International Finance Corp. (IFC) says the World Bank unit will decide in a matter of months whether to approve funding for the 250-MW Bujagali hydroelectric project on Uganda’s Nile River.
�The financing is expected to be in place mid-year,� Director Rachel Kyte of IFC’s Environmental and Social Development Department, said February 28.
Kyte said approval by the IFC board would allow the World Bank’s private sector lending arm to allot its own cash reserves to the US$750 million project. Other lenders, including the European Investment Bank and the African Development Fund, are considering providing funds to the project. (HNN 1/5/07)
The project is being built 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.
A positive signal to East Africa investors
Kyte said the Bujagali project would nearly double Uganda’s electricity output from the Nile River and send a positive signal to investors in East Africa.
�The signal to the markets from this project is powerful,� she said. �It is (good) for every country in the region to do an intricate public-private partnership like this.�
Much of Uganda’s power is generated from the 180-MW Nalubaale project at Owens Falls on the Victoria Nile River. The 200-MW Kiira hydroelectric project is being built adjacent to Nalubaale. (HNN 1/3/07) The landlocked nation of 27 million has suffered severe blackouts in recent years as its national grid struggles to keep up with energy demand rising at about 8 percent a year.
�Our estimate is that the power shortage has cut GDP growth by up to 1 percent,� Kyte said.
Lake Victoria levels unaffected
A fall in the levels of Lake Victoria, which feeds the Nile, cut supply last year, as idle turbines were switched off. However, Kyte said the new dam would not affect lake levels, as alleged by opponents, because it would simply reuse water released by Nalubaale and Kiira. (HNN 12/19/06)
�We believe that Bujagali is economically feasible even with the lake levels low as they are now,� she said. �You’re using the water twice.�
The Bujagali plant has floundered amid claims of bribery and a campaign by a vocal nature conservation lobby arguing it would threaten wildlife habitats and displace local people. However, Kyte said environmental risks could be mitigated.
�People think �dam,’ so they think of some enormous structure of the ’40s and ’50s,� she said. �This project (will have) … a smaller environmental footprint,� she said.
She added that the government had agreed to conserve some biodiversity upstream as an offset to losses from the dam. The project also is to displace 1.2 million of tons of carbon dioxide emissions each year from thermal generators.
Additional generation needed
Kyte stressed the dam would not completely solve Uganda’s power needs, currently at 380 MW and growing.
�You’re looking at a country which has no more than 10 percent of the population (on) the national grid,� she said.
However, Uganda also seeks to develop the 304-MW Ayago North (HNN 2/5/07), 250-MW Karuma (HNN 11/28/06), and 350-MW Kalagala (HNN 9/20/06) hydroelectric projects, in addition to the Kiira project under construction.