8 March 2018

Uganda: Germany Withholds Nyagak Power Project Cash

German government development bank, Kreditanstalt für Wiederaufbau (KfW), has withheld a Shs35 billion grant for Nyagak III hydropower project in West Nile.

State minister for Energy, Simon D'Ujanga, attributed KfW decision to the delay by the project's developer - who was supposed to raise debt finance to build the Shs70 billion-project - to reach financial close.

Consequently, KfW, which had set aside €8 million (about Shs36 billion), of the $19.39 million (Shs70 billion) required for the project, decided to channel its money elsewhere.

"Nyagak III has a 'problem'. KfW have withdrawn their support for this project," Mr D'Ujanga told the House Committee on National Economy on Wednesday, March 7 in Kampala.

"The reason is that the loan has taken long; we got a partner who took long to do financial closure."

Mr D'Ujanga did not name the developer. And, the Daily Monitor could not immediately establish the name of the developer.

Different sources last year put the blame on Parliament, which for the better part of the last quarter focused the Constitution Amendment Bill No. 2 of 2017, a bill whose objective was majorly to lift the age limit for presidential candidates - so that President Museveni can continue contesting for the position.

When members of the committee on national economy, which combs through all foreign loan requests, should have deliberated on the loan, they were instead either 'consulting' on the amendment bill or being talked to by their respective whips.

Parliament has since passed the bill and President Museveni assented to it.

Now that KfW has withdrawn its support, Mr D'Ujanga said the government is mulling over 'how to cover the gap'.

Mr D'Ujanga was responding to Ayivu County Member of Parliament (MP) Benard Atiku and Mwenge South MP Aston Kajaras' questions about electricity projects.

Meanwhile, Japan International Cooperation Agency (JICA) has given Uganda up to March 30 to accept a $125.1 million (about Shs453 billion) loan from Japan to improve the Kampala Metropolitan Electricity Transmission system.

Lawrence Bategeka, the vice chairperson of the committee, said: "The funders are saying their fiscal year [will] end March 30. They are wondering whether [Uganda] is still interested in this [loan] facility."

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