Bujagali Hydro: African Power Deal of the Year

The Bujagali Hydropower Project in Uganda recently received the 2007 African Power Deal of the Year award from Project Finance Magazine. This recognition from one of the world’s leading project finance publications validates the joint efforts by IFC, the World Bank, and the Multilateral Investment Guarantee Agency to address the energy crisis in Uganda.

Weathering a Crisis

Bujagali is part of a broader World Bank Group response to a request from the Ugandan government to help address a severe power shortage. Only 5 percent of the population has access to electricity. This creates very high demand, causing frequent and lengthy power blackouts in residential and industrial areas.

Hospitals, schools, businesses, and the livelihoods of millions are affected daily by this crisis, making power one of the biggest obstacles to the country’s economic development. Air pollution from thermal generators and charcoal, which most people use as alternative sources of energy supply, also create environmental challenges for the country.

The project, which started in 2007, is the largest independent power project in Africa. It involves developing, building, maintaining, and operating a 250-megawatt run-of-river power plant on the Victoria Nile in Uganda. The plant will recycle water released from nearby hydropower facilities to generate additional electricity. Extensive economic and technical analyses have identified Bujagali as the lowest-cost option for increasing electricity supply in the country.

Expected Benefits The project is expected to have a major economic and developmental impact on Uganda. It will: Reduce the average cost of electricity supply by up to 7 percent for end users Expand access to electricity Reduce power shortages Improve air quality Improve the investment climate and attract private sector investors Foster economic activity and create nearly 1,100 jobs Help reduce poverty

Partnering to Create Solutions

The project was made possible by a public-private partnership between the government of Uganda and Bujagali Energy Limited. The company was established as a joint venture between Industrial Promotion Services Ltd, an arm of the Aga Khan Fund for Economic Development, and the U.S.-based Sithe Global Power LLC.

The World Bank Group financing package comprises a $130 million IFC loan, a partial risk guarantee of up to $115 million from the International Development Association to benefit the project's commercial lenders, and an investment guarantee of up to $115 million from the Multilateral Investment Guarantee Agency to Sithe Global Power. Seven other development finance institutions are supporting the project in recognition of its expected development impact.

These partnerships are an indication of the growing trend to advance the development agenda in Africa through infrastructure projects. As IFC Director for Infrastructure Rashad Kaldany commented, "The award to Bujagali acknowledges the significance of financing large power projects in Africa. To mitigate risk, such projects can only be realized by involving development agencies and commercial lenders."

For more information contact:

Zibu Sibanda
IFC Communications Officer
Phone: +202-473-0605
E-mail: zsibanda@ifc.org