Uganda to extend Bujagali tax breaks beyond mid-2017 over high power tariffs
Sunday October 16 2016
An aerial view of Bujagali power station in Uganda. The dam has increased the country’s installed generation capacity to 850MW against a peak demand of about 500MW. PHOTO | FILE
The Ugandan government will waive corporate income tax of at least Ush96 billion ($28 million) per year, extend the tenure of loans on Bujagali and inject new debt and equity as it seeks to reduce the price of electricity produced by the hydropower project, sources say.
The ongoing debate about Bujagali reflects a shift in challenges in Uganda from a lack of generation capacity that led to chronic power blackouts and the rolling out of expensive thermal power plants that cost up to $632m in subsidies, to ample supply of expensive electricity.
Any refinancing of Bujagali is likely to benchmark against the terms of Isimba and Karuma, both of which are financed by the China Exim Bank, and which were recently hedged, in a derivative transaction between Uganda Electricity Generation Company Ltd and two local banks, at an interest rate of six per cent.