The Emerging Africa Infrastructure Fund (EAIF) and Dutch development bank FMO are going 50-50 to provide US$29.3 million in funds to refinance the 13MW Bugoye hydroelectric power plant in Western Uganda.

The funding will take the form of Senior Debt with a 12-year term, and will be used to repay EAIF the balance of its original loan to the project, fund repair works, and repay construction loans made by the project sponsor (and indirectly, the 100% shareholder in Bugoye), the Africa Renewable Energy Fund (AREF), managed by Berkeley Energy. AREF is to use the refinancing proceeds to invest in other greenfield hydroelectric plants in Uganda.

Bugoye currently has 98% availability, and has been producing electricity since 2008. It feeds power into Uganda’s national grid.

Nazmeera Moola, head of EAIF at IAM, says the refinancing is very good example of how a successful power generation facility can be used to mobilise fresh capital to build new capacity.

“In refinancing Bugoye, EAIF and FMO are freeing up capital that AREF will use to develop greenfield renewable power stations,” Moola said. “That will add to Uganda’s economic potential by increasing the country’s generation capacity, and creating new jobs in construction and plant operation. We have been able to have added developmental impact because Bugoye is an established, efficient and viable business with a suitable risk profile. In backing the project, the leaders of EAIF and FMO demonstrated strategic, long-term, thinking and wholly constructive commercial flexibility.”

 Nicholas Tatrallyay, Investment Manager at Berkeley Energy added: “The Bugoye refinancing is one of the first refinancings for small hydro projects on the continent and is an important milestone for Uganda’s renewable energy sector. The Bugoye refinancing will allow AREF to invest additional capital into Uganda and further expand its portfolio of hydro projects in the country.”