AfDB had indicated in May it was approving the loans to the 250MW hydro project to be built on the White Nile river by 2011.
The move followed the World Bank's catalyst decision to back the scheme with US$360M in loans and guarantees. The European Investment bank (EIB) has also approved Euro100M (US$135M) for the run-of-river scheme.
Costing a total of about US$800M, the Bujagali project will be built by a JV of Industrial Promotion Services (IPS), which is based in Kenya, and US firm Sithe Global Power.
The hydro scheme has been through various stages of development and promotion since the 1990s.
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