Contacts In Washington: IDA: Christopher Walsh +1 (202) 473 4594 cwalsh@worldbank.org IFC: Zibusiso Sibanda +1 (202) 473 9167 zsibanda@ifc.org MIGA: Angela Gentile +1 (202) 473 3509 agentile@worldbank.org In Kampala: Steven Shalita +256 (41) 430-2236 sshalita@worldbank.org WASHINGTON, December 21, 2007 – The World Bank Group’s US$360 million investment of loans and guarantees for Uganda’s Bujagali Hydropower Project took effect this week as the project’s private sponsors and lenders reached financial closure. Interest rates and contract terms for the project were locked in, allowing the developer’s notice to proceed to take effect. The 250 Megawatt project on the Nile River is an integral component of Uganda’s strategy to close an energy supply gap that seriously constrains the country’s social and economic development. “We welcome the close of contract negotiations between Bujagali Energy Limited* (BEL) and the project’s commercial investors as an example of partnerships that can make a real difference in Uganda’s, and Africa’s development,” said World Bank Uganda Country Manager Grace Yabrudy. “Bujagali will bring a more reliable and accessible power supply that will help create jobs, reduce poverty, and improve quality of life.” Once commissioned in 2011, the run-of-river hydropower plant will re-use water flowing from two existing upstream facilities to generate additional electricity. The additional electricity will increase the supply to the national power grid at the lowest cost compared to other power generation expansion options under Uganda’s energy sector strategy. The World Bank Group’s support comprises US$130 million in loans to the private project company, BEL from IFC; a partial risk guarantee of up to US$115 million from the International Development Association for the benefit of the project’s commercial lenders; and an investment guarantee of up to US$115 million from the Multilateral Investment Guarantee Agency, the World Bank’s political risk mitigator. “The Bujagali Hydropower Project is an important element in Uganda’s strategy to develop a reliable and accessible electricity sector, which is critical for the country’s economic growth and development,” says Rashad Kaldany, IFC’s Director of Infrastructure. “IFC is pleased that work on the project has commenced, as it is expected to reduce power shortages as well as CO2 emissions in Uganda, thus lessening the need for more expensive thermal power.” “MIGA’s guarantee, the linchpin to securing part of the Bujagali equity investment, supports the agency’s overall strategy of helping Uganda address the electricity issues it is facing,” says Edith Quintrell, MIGA’s Director of Guarantees. This is the agency’s third guarantee for an electricity project in Uganda in two years. The Bujagali Hydropower Project is one element of the World Bank Group’s support for Uganda’s energy sector strategy. Other elements include a Power Sector Development Operation (US$300 million) that provides funding for a set of investments and policy measures designed to reduce the supply-demand gap until the Bujagali hydropower plant comes into service. Support is also provided through three ongoing projects: the Power IV investment project (US$62 million) supporting improved power supply and Government capacity to manage sector reform; the Energy for Rural Transformation Project (US$50 million), which supports the development of rural areas’ access to renewable electricity; and US$40 million in investment guarantees for an electricity distribution company. The Bujagali Hydropower Project has undergone extensive economic, environmental, and social due diligence. Documents made available to the public include the Project Economic Analysis — prepared by an independent consultant — and the Power Purchase Agreement. Consultations between BEL and the local communities have been ongoing throughout the project. ### *Bujagali Energy Limited is a joint venture between Industrial Promotion Services Ltd. (Kenya) and the US-based Sithe Global Power, LLC, which have established BEL to implement the project. IPS (K) is the industrial development arm of the Aga Khan Fund for Economic Development—a member of the Aga Khan Development Network. Sithe is an international development company that develops, constructs, acquires, and operates strategic power assets around the world. For more information about this project, please visit www.worldbank.org/bujagali. For more information on the Bank’s work in Uganda, please visit www.worldbank.org/ug. |
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