Elias Biryabarema
6 November 2008
Kampala — Emerging Africa Infrastructure Fund, EAIF, an international private infrastructure financier founded by the governments of UK, Sweden, Netherlands and Switzerland has offered a $49 million loan to the developers of two mini-hydro projects in Uganda.
The projects, Mpanga and Bugoye hydropower dams being constructed in Kamwenge and Kasese districts respectively, are being developed by Tronder Power Limited, and South Asia Energy Management Systems, SAEMS, a US company that provides renewable energy solutions.
Once completed, which is expected in a year, both projects will inject a combined 31MW of hydro power into the grid, partially plugging the ever widening power deficit in the country and cutting back on the frequent outages.
They are both mini hydropower dams and their quick progress is viewed as testament to the relative success of government's policy of boosting the nation's power supply through a dual strategy of simultaneously harnessing the nation's small, scattered and low-capacity renewable energy resources and developing large-scale projects like Bujagali and Karuma.
Because they normally involve relatively small up-front capital requirements, most of these small dams are being undertaken by private developers and they are designed to meet the energy needs in a specific locality, usually urban centres in the immediate neighbourhoods.
Uganda currently produces about 280MW while peak power demand stands at about 350MW, growing at a rate of 30 per cent per year, according to the Electricity Regulatory Authority (ERA). Power from Bugoye will be fed into the main grid at the Nkenda Substation via a 6km long 33kV transmission line. This transmission line will be financed by a grant from the Norwegian government to Uganda.
Power supply problems are said to severely depress Uganda's economic growth, with most businesses unable to exploit their full potential on account of insufficient power. And worse, even the little that is supplied is priced exorbitantly. As an emergency effort to reduce widespread power outages, the Uganda government has in the last two years procured thermal power plants in partnership with private sector investors but the electricity produced has been exorbitantly priced and companies and households have been reeling under the burden of heavy power bills.
The government has placed a great deal of hope on the Bujagali project now under construction in Jinja which will yield 250MW on completion in 2011. However, critics say even Bujagali won't provide a silver bullet to the country's electricity capacity constraints because protracted under investment in generation infrastructure has produced a gap so immense that it till take years to plug.
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