Two World Bank financing affiliates have approved plans to stagger a crippling debt that has faced Uganda’s leading public-private Bujagali Hydropower Project which has slowed down the project ambitions of reducing cost of energy in the country .
The boards of the International Financing Corporation (IFC), the financing arm of the World Bank Group as well as the Multilateral Investment Gurantee Agency (MIGA) which is promotes direct foreign investment in emerging economies, have agreed to extend payments periods on loans originally given out in 2007.
Bujagali, a run-of-river hydropower project on the Victoria Nile, is one of the largest power-generation plants in Uganda, contributing 45 percent of the country’s annual electricity generation.
The subordinated loans Bujagali Hydropower project has been servicing annually were given by IFC, the African Development Bank (AfDB), the European Investment Bank (EIB), the Netherlands Development Finance Company (FMO), France’s Agence Francaise de Developpement (AFD) and Proparco, Germany’s DEG and KfW, and four commercial banks (ABSA, BNP Paribas, Nedbank and Standard Chartered Bank).
On its part, Uganda government a major shareholder of the Bujagali Energy Limited (BEL) has agreed to pass the savings accrued from the loan extension to the power consumers in order to reduce the cost of power as well as spur economic growth. Other shareholders of BEL include Industrial Promotion Services (Kenya) Limited; SG Bujagali Holdings Ltd, an affiliate of Sithe Global Power, LLC (USA).
In addition, MIGA will provide political risk guarantees of up 20 years for equity investors in Bujagali Energy Limited, helping to shore up investor support and long-term engagement with the project.
Bujagali’s commissioning in 2012 allowed the government to retire more than 100 megawatts of diesel power plants and made it possible to nearly eliminate government subsidies to the electricity sector. Since 2005, the share of Uganda’s population with access to electricity has increased from 9 percent to 22 percent, with the total number of customers having grown from 292,000 to more than 1.1 million over the same period.