22 May 2018

Uganda: AFD Gives Uganda €37.1m for Power Transmission Line

Uganda will receive €37.1 million (about $44.2 million) from the Agence Française de Dévelopement (AFD) after the two parties signed a financing agreement for the upgrading of a key transmission line.

The financing of the 400 kV transmission line upgrade project will cover a distance of 135km between the towns of Masaka and Mbarara, according to a statement from the AFD. At the end of the upgrade, it is expected the transmission line will help in the evacuation of power from different sources and enable exports of electricity to neighbouring countries such as Rwanda and the Democratic Republic of Congo.

Germany's KfW is the co-financier of this project, which follows feasibility studies that were financed by the European Union Infrastructure Trust Fund three years ago.

Uganda continues to face a lot of challenges in the transmission of its power. Many electricity generation projects such as Karuma and Isimba hydro power plant are expected to come on line over the next nine months, with worries that the transmission network might not be able to evacuate all this power.

Government has come up with policies that will compensate large consumers that are able to put up power distribution networks. Also, the Nile Equatorial Lakes Subsidiary Action Programme regional interconnection project is expected to ease on the burden of the transmission network.

Meanwhile, Sugar Corporation of Uganda, the third largest sugar plant in Uganda, recently received €40 million from France's Proparco to finance a new 26MW co-generation power plant.

According to the financial arrangement, Proparco granted a €20 million loan and catalyzed funds from the Dutch development bank, FMO, which contributed a similar amount to the project.

The new power plant, FMO said, "will allow the company to produce green electricity at a competitive price to meet its own needs and to be sold to the national grid."

The generation of the electricity will be done by burning bagasse, a residue of sugarcane. Electricity generation from the use of bagasse has become popular, attracting a number of factories into the industry, which has in turn shrunk the margins of the older firms from the sale of sugar.


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