31 January 2013

Uganda: U.S.$50 Million Kalangala Project to Begin

A $50m (sh135b) infrastructure project that will bring piped water, electricity and water transport to Bugala Island in Kalangala district will kick off in earnest in April.

The project, which has been in development since 2005, is a result of the Government's obligation to support BIDCO's oil palm project based on the same island.

The project, owned, finanaced and to be operated by Kalangala Infrastructure Services (KIS), will involve the provision of two ferries, generation of up to 1.6megawatts of electricity, upgrade an existing 66km road and develop a water supply system.

"In 2003, the Government signed an agreement with BIDCO in which it was agreed that the Government would provide supporting infrastructure for the company's oil palm project," KIS' John Opiro said.

"The Government with competing demands on its money did not have all the money required to meet its end of the agreement at once so it went out looking for development partners with experience, technical know-how, funding and committed to taking the commercial risk of developing the infrastructure on the island."

It is then that the Government went into a public-private partnership with UK firm InfraCo. The project's financing was approved in December, but work had already begun on providing some of the infrastructure.

"We have already developed the water supply in two areas, supplying 5,000 people with clean water and this was commissioned in 2007. We have rehabilitated the landing sites at Bukakata and Luku and we have assembled the first of two ferries, MV Pearl. Operations have been on since August 2012," Opiro said.

The project, when fully commissioned, will cause a spurt in development on Bugala Island by encouraging business startups, lowering the cost of doing business and bringing social services nearer to the people on the island.

"There is a lot of disposable income on the island from fishing and the oil palm farmers. By providing backbone infrastructure, we can improve their standard of living and attract others to the island," Opiro said.

He explained that they will bill for water and electricity, but will recoup their money for the road and ferry from the Government.

The cost of the 66km road, 10km of which will be tarmacked, cannot be recouped using road tolls, so the Government will pay for the cost of building the road and a margin for the investors. The ferry will also be used free by the islanders and their visitors, with government bearing the cost.

"It is not an ideal situation but the Government sees the ferry as an extension of the road and does not wish for the time being that travellers pay for the 20-minute ride," he said.

With the power situation KIP sees itself distributing an additional 5MW in the near future. BIDCO has set up a thermal power plant, which can off load excess power onto the KIP grid.

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