The Kikagati hydropower station project being built on the border between Uganda and Tanzania has reached financial close; this is according to Emerging Africa Infrastructure Fund (EAIF). According to EAIF Executive Director, Emilio Cattaneo, the financial close means the first tranche of debt funding has been released to the Kikagati Power Company (KPC), who will own and operate the plant when construction is complete.
“The announcement of the financial close of the US $54m debt finance package for the Kikagati hydro-electricity station brings closer a new source of electricity that will be equally shared between Uganda and Tanzania. EAIF is lending US $27m and the Dutch development bank (FMO), has contributed the same amount. Both loans have 16-year terms. The overall cost of the project is US $87m,” said Cattaneo.
Kikagati hydropower project
The hydro power project is located on the Kagera River which is on the border between the two nations. The project consists of an 8.5m-high dam of 300m in length, creating a 4,000 square meters (0.99 acres) reservoir lake. The plant will also have three turbines of 5.5MW each and associated earthworks, control plant rooms and allied infrastructure connecting the plant to switch yards in Uganda and Tanzania.
Initially, the Chinese company China Shan Sheng, was issued the construction license for the project in 2008. At that time, construction costs of the entire project were estimated at US $25m. In 2013 the Chinese opted out of the deal and development rights were taken up by TronderEnergi, a Norwegian power company, with a Ugandan Subsidiary In July 2013, TronderEnergi advertised for suitable firms to bid on the construction of Kikagati Power Station and SBI International AG turned out as the best bidder and was awarded the construction contract with a new cost of US $50m.
The contractor started work on the site in February 2018, with commissioning date planned for the first half of 2021. 100% of the energy generated will be bought by the Uganda Electricity Transmission Company Limited, Uganda’s single-buyer and Transmission Company.
A 33kV transmission line that will connect the power from the station to the Uganda national electricity grid has already been constructed. Under arrangements made through the East African Community, Uganda Electricity Transmission Company Limited (UETCL) will sell half the energy on to Tanzania The plant will also benefit from the “GetFiT” programme, which is funded by a number of European governments and the EU. GetFiT funding brings down the average cost of power to consumers. Approximately 250 people are involved in construction work and around 10 permanent staff will run the plant once operational.