Muzizi project to begin as European lenders give $95m - The East African

Muzizi project to begin as European lenders give $95m

Wednesday December 21 2016


Germany and France have given €90 million ($95.6 million) to Uganda for the construction of 45MW Muzizi hydropower dam.

The project in western Uganda, whose total cost is estimated at €110 million (about $117 million), has been in government plans for several years now, but in August last year, German’s KfW and France’s Agence Francaise de Developpement (AFD) agreed to finance it.

“The money is now with the government,” said Oliver Jünger, director of KfW in Kampala.

In a funding agreement signed on December 9, by KfW, AFD and the Ministry of Finance, the lenders will provide $95.6 million while the government will put in equity contribution of about €20 million ($21.3 million) to ensure full financing of the project that will be developed by the Uganda Electricity Generation Company Ltd (UEGCL).

KfW will provide a concessional loan of €40 million ($42.6 million) and a grant of €5 million, ($5.3 million) while funding from AFD in the form of a concessional loan of €45 million ($47.9). 

The project is located on the River Muzizi, upstream of Lake Albert in Kibaale district and will also cover the districts of Kyenjojo, Kabarole and Ntoroko.

With funding now available, UEGCL and KfW will start contracting firms to do technical and engineering designs, with construction scheduled to start in 2018 to be completed by 2021.

UEGCL has contracted the international consultants ILF Austria as implementation engineers to complete the technical design. When complete, Muzizi will increase the current power generation capacity in Uganda by about 5 per cent, enough to supply about one million people.

The project will also contribute to a sustainable growth pattern for the country and save 123,000 tonnes of carbon emissions by replacing expensive and environmentally unfriendly diesel generators.

With its current installed capacity of 862MW, Uganda has set an ambitious target in its National Development Plan II — to generate 2,500MW to cater for per capita consumption of 578kWh by 2020, from the current 80kWh.

Besides the big hydropower projects – the 600MW Karuma and the 183MW Isimba dams – currently under construction, other small projects are expected to contribute 36MW.