Ø      Less than five percent of Uganda’s population has access to electricity. Power shortages have substantially impeded investment, private sector development, and economic growth, contributing to a decline in GDP growth to around five percent in 2005/6 from almost six percent in previous years.  Ø      The Bujagali hydropower project, a proposed 250MW run-of-the-river hydro-electric power plant on the Victoria Nile, is an integral part of Uganda’s strategy to tackle this crisis.  Ø      The World Bank Group supports the Bujagali project because it is the least-cost option under Uganda’s power generation expansion plan. Once commissioned in 2011, Bujagali would relieve power shortages in Uganda and substantially reduce the need for more expensive thermal power.  Ø      Bujagali is one element of the World Bank Group’s support of Uganda’s energy sector strategy. The World Bank is also processing a $300 million credit, which includes a US$220 million component for power sector development and an US$80 million component for policy-based lending to provide budgetary support to the sector, financing US$50 million to develop rural areas’ access to renewable electricity, and providing US$5.5 million of partial risk cover. The Bank Group is also financing US$50 million to develop rural areas’ access to renewable electricity, and is providing US$40 million in investment guarantees for an electricity distribution project.  Ø      The Bujagali project has undergone extensive economic, environmental, and social due diligence, and has exceeded disclosure requirements, having availed to the public the Project Economic Analysis — prepared by an independent consultant — and the Power Purchase Agreement, as well as launching project-dedicated websites: www.bujagali-energy.com and www.worldbank.org/bujagali .  Ø      Several consultations have been held throughout the project between the private sector sponsor, Bujagali Energy Limited (BEL) and project-affected communities. The most recent took place March 1-2, 2007.  Ø      BEL is a private company comprised of Industrial Promotion Services (Kenya) Ltd. and Sithe Global Power LLC (US).  Ø      The project cost of Bujagali is currently estimated at US$799 million, although contract negotiations are ongoing. The private sector lending arm of the World Bank, the International Finance Corporation (IFC), is evaluating an investment of up to US$130 million in the form of A and C Loans in BEL, for the development, construction, and operation of the Bujagali facility. The International Development Association (IDA), the interest-free lending arm of the World Bank, is expected to provide a Partial Risk Guarantee of up to US$115 million for the benefit of the project’s commercial lenders. The Multilateral Investment Guarantee Agency (MIGA), the World Bank’s investment risk mitigator, is considering providing equity risk insurance of up to US$115 million for Sithe Global’s investment.
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