15 March 2007

Uganda: Salini Takes Bujagali Project

Kampala — THE government has awarded the proposed 250MW Bujagali hydropower deal to Salini Construtorri, an Italian construction company.

While appearing before the Parliamentary Committee on Natural Resources on March 13, Energy Minister Daudi Migereko said M/s Salini, the company also undertaking the construction of the Northern Bypass project, offered a "better" offer after an international bidding process involving 11 companies.

"This company provided the government with a better proposal and it has experience in the hydropower construction ventures on the continent. Our technical people are satisfied that Salini will handle this project," Mr Migereko said.

He said the government has information that Salini is also constructing a 1500MW project in Ethiopia and has undertaken other similar projects in Mozambique and Angola.

He said a consortium led by Industrial Promotion Services (IPS) of Kenya with the American company Sithe Global won the bid to sponsor the project, after which they embarked on the procurement of a contractor to undertake engineering, procurement and construction of Bujagali power project.

The Energy State Minister Simon D'ujanga told the committee that the government is negotiating with the World Bank to have early commencement of the construction.

"We are happy to report that the government has already secured $100 million for the early start to the project," Mr D'ujanga said.

However, the announcement comes shortly after the cost of the proposed 250MW Bujagali hydropower plant has risen to $750 million (Shs1,320 billion) from $500m (Shs880 billion), according to a recent World Bank study.

Snapshots of the study show that the increment was due to the rising construction costs due to the high oil, metal and cement prices on the world market.

The project costs including construction, capitalised financing costs, contingencies and other related costs for the dam and power house have been estimated to be $750 million, according to the project documents.

An official in the energy ministry told Daily Monitor on March 13, that the tentative financing of the project would include $150million (about Shs264 billion) from shareholders, $480million (about Shs844 billion) in long-term debt, while the International Development Agency will provide $115 million.

Uganda currently has a power deficit of more than 120MW, but Mr Migereko plans are already way to construct another power plant at Karuma in Masindi district. He said the government has held discussions with the Norwegian project developer, NORPAK and a memorandum of understanding is being finalised so that the construction can commense as soon as possible.

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