Kampala, Uganda, July 23, 2018— A consortium
of development finance institutions and commercial lenders today announced
completion of the refinancing of more than $400 million loans of Bujagali
Energy Limited (BEL), aiming to help reduce electricity costs in Uganda.
The financiers include IFC, a member of the World Bank Group, African Development
Bank (Joint Mandated Lead Arrangers), Netherlands Development Finance Company
(FMO), France’s Proparco, Germany’s DEG, United Kingdom’s CDC and two
commercial banks: ABSA and Nedbank. The refinancing package will extend
the tenor of the bulk of the senior and subordinated loans originally provided
Bujagali, a run-of-river hydropower project on the Victoria Nile, is one
of the largest power generation plants in Uganda, contributing 45 percent
of the country’s annual electricity generation. It provides clean, reliable
base-load energy. Its commissioning in 2012 significantly reduced Uganda’s
reliance on costlier thermal power generation.
This extension in tenor will reduce BEL’s annual debt servicing payments
and make it possible for the company to reduce the cost of electricity
produced by the hydropower plant over the next five years. This was an
innovative approach and one of the first to be implement in Sub Saharan
Africa in which the Ugandan government has committed to fully pass on these
cost savings to consumers, in support of its goals to spur economic growth
in the country.
The project has support from across the World Bank Group and the African
Development Bank. As previously announced, MIGA’s Board approved political
risk guarantees of up to 20 years for equity investors in Bujagali Energy
Limited, helping to shore up investor support and long-term engagement
with the project. An existing partial risk guarantee from the International
Development Association for two of the project’s commercial lenders remains
Alongside the original financing for BEL, African Development Bank’s public
sector window financed a transmission line project at Bujagali, the UECTL
Bujagali Interconnection Project. The project, which links the Bujagali
hydropower plant to the national electric grid, consisted of: construction
of part of the Bujagali substation; construction of the Kawanda substation;
extension of Mutundwe substation; social and environmental measures; consultancy
services; and financing for a Community Development Action Plan.
The World Bank Group has been a long-term partner in the Ugandan power
sector. The World Bank, through IDA, continues to engage with the government
in support of efforts to upgrade the country’s transmission and distribution
networks and expand on-grid and off-grid access to electricity, providing
connections for homes, schools, and health clinics. IFC is already an investor
in Umeme—Uganda’s main distribution company—both as lender and shareholder.
Bujagali’s commissioning in 2012 allowed the government to retire more
than 100 megawatts of diesel power plants and made it possible to nearly
eliminate government subsidies to the electricity sector. Since 2005, the
share of Uganda’s population with access to electricity has increased
from 9 percent to 22 percent, with the total number of customers having
grown from 292,000 to more than 1.1 million over the same period.
More than 90 percent of Uganda’s electricity is now generated from renewable
sources, making the Ugandan power grid one of the cleanest in the world.
IFC—a sister organization of the World Bank and member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging markets. We work with more than 2,000 businesses worldwide,
using our capital, expertise, and influence to create markets and opportunities
in the toughest areas of the world. In FY17, we delivered a record $19.3
billion in long-term financing for developing countries, leveraging the
power of the private sector to help end poverty and boost shared prosperity.
For more information, visit www.ifc.org
The African Development Bank Group is the premier development finance institution
in Africa with a mandate to spur sustainable economic development and social
progress in the continent, thereby contributing to poverty reduction. The
Bank Group achieves this objective by mobilizing and allocating resources
for investment in the continent; and providing policy advice and technical
assistance to support development efforts. The African Development Bank's
authorized capital of around $ 100 billion is subscribed to by 80 member
countries made up of 54 African countries and 26 non-African countries.
The African Development Bank Group commenced operations in Uganda in 1968.
As at December 2016, the Bank’s active portfolio in Uganda amounted to
$ 1.234 billion, comprising 15 public sector operations of $1.1 billion,
6 multinational operations of $ 166.86 million and 3 private sector operations
of $ 21.5 million. The portfolio comprises operations in transport (15.57%),
social (13.4%), agriculture (22.4%), water supply and sanitation (16.36%),
energy (17%), multinational (13.53%), and private sector (1.74%).
World Bank Group support for the Bujagali Hydropower Plant