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Uganda kicks off construction of Isimba plant

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By JOINT REPORT The EastAfrican

Posted  Saturday, October 5  2013 at  13:10

In Summary

  • The construction contract of the 188MW power station and transmission lines, was given to state-owned China International Water & Electric Corporation (CWE).
  • Isimba is the second of five hydropower generation projects with a combined capacity of 2,088MW to be constructed over the next seven years.
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Two months after launching the construction of the 600MW Karuma hydropower station, Uganda has kicked off the construction of the 188MW Isimba power station 40 kilometres downstream of the 250MW Bujagali power station.

The contract, part of a $2 billion finance package by the Chinese government for the two power stations — Isimba and Karuma — and transmission lines, was given to state-owned China International Water & Electric Corporation CWE.

The back-to-back construction of the power projects forms the first plank of an ambitious power generation programme under which Uganda seeks to add 2,088 Megawatts to the grid over the next seven years.

Uganda wants to double the transmission network from the current 1,700 kilometres in the next four years and expand power generation facilities before production of crude oil starts in the Albertine basin in 2017.

According to sources, CWE was awarded the contract for Isimba as part of a process in which the Energy Ministry sought to avert litigation over the firm’s loss of the Karuma contract to rival China Sinohydro.

Under the finance deal, Uganda will contribute 15 per cent of the money required for the two projects with 100 per cent of the finance for Isimba coming in on concessional terms while at least 45 per cent of the package for Karuma will be lent on commercial terms.

The implementation of the two projects is intended to keep supply ahead of demand for electricity, which is growing at 8 per cent annually. The smaller Isimba power station is supposed to come on line earlier than Karuma, which will only begin delivering energy in August 2018.

Uganda’s economy is projected to grow at 6 per cent annually in the medium term and with construction of an oil refinery and electric railway line, all expected to be operational by 2018, the country needs a steady supply of electricity.

Isimba is the second of five hydropower generation projects with a combined capacity of 2,088MW to be constructed over the next seven years.

According to an MoU signed with the Chinese government, Beijing will underwrite the construction of three of these projects – Ayago (600MW), Isimba (188MW) and Karuma (600MW). Another Chinese civil contractor, China Gezhouba, has been tapped to construct Ayago.

The Ayago project is to be developed as a public private partnership. Uganda also plans to increase production of small to medium hydro power plants to 150 Megawatts in the next three years from the current 60 MW.

Internally, Uganda also faces the challenge of evacuating the power it will be generating in the short term. According to Junior Energy Minister Simon D’Ujanga, however, more than $500 million will be invested in the construction of six lines for heavy transmission of electricity to increase connection to the national grid.

The projects include expansion of national grid lines with power substations to increase both access and reduce transmission and commercial electricity losses, from the current 23 per cent to 14.8 per cent by 2018.

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