IFC Provides Financing and Construction Begins on World Bank Group-Supported Bujagali Hydropower Project
A ceremony laying the foundation stone for the Bujagali Hydropower Project was held in Uganda on Tuesday. An IFC, World Bank, and MIGA-backed project, Bujagali is an integral component of Uganda’s strategy to close an energy supply gap constraining social and economic development. The ceremony was attended by Ugandan President Yoweri Museveni and His Highness the Aga Khan, marking the start of construction of the 250 megawatt, run-of-the-river hydropower plant. Local dignitaries and representatives from the development community that have supported the project were also present.
IFC has signed its loan agreement with Bujagali Energy Limited, the company responsible for developing the project, providing a total of $130 million in loans. The World Bank Group financing package to the project also comprises a partial risk guarantee of up to $115 million from the International Development Association to benefit the project’s commercial lenders, as well as an investment guarantee of up to $115 million from the Multilateral Investment Guarantee Agency to Sithe Global Power, one of the project’s shareholders.
Once Bujagali is commissioned in early 2011, the hydropower plant on the Victoria Nile will reuse water flowing from two upstream facilities to generate electricity. The project is the lowest-cost option for supplying additional electricity to the country’s national power grid.
“Access to infrastructure, specifically reliable and affordable power, is critical to attract investment and promote growth,” said Lutaf Kassam, Group Managing Director, Industrial Promotion Services. “The successful implementation of the Bujagali project will help alleviate poverty and improve the quality of life in Uganda.”
“IFC’s investment in Bujagali Energy Limited is an essential part of Uganda’s strategy to develop a sustainable and affordable source of electricity, which is key for economic growth and development,” commented Rashad Kaldany, IFC Director for Infrastructure. “The project will relieve energy shortages and substantially reduce the need for more expensive thermal power.”
“This is one of the largest private sector investments in the power sector in Sub-Saharan Africa,” said Bruce Wrobel, CEO of Sithe Global Power. “The World Bank Group and other development lenders have played an essential role in funding this project, which will contribute to more affordable tariffs for consumers.”
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