No financial closure yet for Uganda’s Karuma hydropower project

Karuma hydropower dam
Karuma hydropower dam

The contractor of the Karuma hydropower dam project, Chinese firm Sinohydro Corporation Ltd, is yet to attain financial closure for the project. The total cost of the project is US$1.7bn. This amount includes the costs needed to build transmission lines to a location where the power will be integrated into the national grid. The project is expected to generate 600MW of electricity once completed.

The project was to be funded 85% by a soft loan from Exim Bank procured by the Chinese firm, while Uganda was to cater for the remaining 15%. The firm has now asked the Ugandan government to pay its 15% share of the deal up front to speed up the project which is several years behind schedule.

According to Energy Minister Irene Muloni, the Ugandan Government will collaborate with the contractors since work had already begun at the site adding that they were not going to delay the project further.
Sinohydro has confirmed that if China Exim Bank does not hold up to its end of the deal, then they will have no choice but to continue with the Karuma dam project on a public-private partnership basis with the government of Uganda on terms that deliver an affordable tariff as indicated by Sinohydro’s chief representative in Kampala.

The project has been coupled with various challenges arising from allegations of corruption on the process of procuring the tender and challenges of getting skilled man-power to operate the machines.

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