Finance Minister Matia Kasaija has announced that government has secured about 90 million Euros (nearly Shs 342bn) as a concessional loan for the construction of Muzizi hydropower plant project.
The concessional funds have been provided by the French Development Agency (AFD), contributing Euros 45m (Shs 171bn) and German Development Bank (KFW), contributing Euros 40m (Shs 152bn). Additionally, KFW is also providing a grant of Euros 5.24m to the same project.
Speaking during the signing of the loan financing agreement at the finance ministry headquarters recently, Kasaija said that power generated from Muzizi will be fed into the national grid via the proposed Hoima Fort portal-Nkenda 220 kilo volts (kV) transmission line.
“The project is critical for the achievement of growth targets set out in Uganda’s National Development Strategies,” Kasaija said. However, government is expected to inject about Euros 20m (Shs 76bn) to ensure full financing of the project. It is estimated to cost about Euros 110m (Shs 418bn) according to Kasaija.
The projected will be developed by Uganda Electricity Generating Company (UEGCL) with expected total capacity of 45MW. According to information from the official, UEGCL has already contracted Austria-based international consultant, ILF Consulting Engineers, to complete the technical design of the project and support the procurement of a construction company.
According to Kasaija, construction works are expected to commence in 2018 and commissioning of the power plant in 2021.
“I want to draw the attention of UEGCL and the ministry of energy and mineral development on the need to keep track of the implementation schedule,” Kasaija said.
Stephanie Rivoal, the French Ambassador to Uganda, said the aim of this concessional loan is to support the government of Uganda in infrastructure development in the energy sector.
“It is known that the burning of renewable resources provides approximately 90 per cent of the energy in Uganda, while much of the hydroelectric potential of the country largely remains untapped,” Rivoal said.
The Muzizi project will increase the current power generation capacity in Uganda by about five per cent. It is estimated to supply about one million people with clean electricity from hydro power. This creates an important precondition for rural electrification and economic development in the project area.
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