Energy without borders – clean, renewable energy for Uganda and Tanzania
In March 2019, EAIF announced the signing of a US$27 million loan to Kikagati Power Company Limited (KPCL). The company is building a 14MW run-of-the-river hydro electricity generating station at Kikagati on the Kagera River on the border between Uganda and Tanzania.
The Kikagati plant is the 10th renewable energy development EAIF has backed in Uganda, demonstrating the benefits of replicating experience, financial structures and legal documentation. 138MW of renewable generating capacity in Uganda has been financed by the EAIF as at Q1 2019, representing a total investment of US$126 million.
Uganda has one of the world’s lowest rates of electrification, with an average national rate of 20%, falling to as low as 6% in rural areas. Kikagati’s rural location means that villages and businesses in the immediate area stand to benefit from the reliable and affordable power the plant will supply.
100% of the energy generated will be bought by the Uganda Electricity Transmission Company Limited which will then sell half the energy on to Tanzania. Close collaboration between the developer and the governments of Uganda and Tanzania was important to making the project possible and viable.
KPCL’s plant is to consist of an 8.5m-high dam of 300m in length, three turbines of 5.5MW each and associated earthworks, control and plant rooms and allied infrastructure connecting the plant to switchyards in Uganda and Tanzania. Around 250 people will be involved in construction work. Once operational, around 10 permanent staff will run the plant.
FMO, the Dutch development bank, was mandated lead arranger of the project financing, and is lending US$27 million. The EAIF and FMO loans are over 16 years, a term that improves the long-term viability prospects of the project.
The Kikagati plant will benefit from the “GETFiT” programme. GETFiT is funded by a number of European governments and the European Union. It provides a tariff subsidy to a number of renewable energy facilities across Uganda. GetFiT funding brings down the average cost of power to consumers.