The 14MW Kikagati hydro power station being built on the border between Uganda and Tanzania has reached financial close, the Emerging Africa Infrastructure Fund (EAIF) has announced, meaning that the first tranche of debt funding has been released to the Kikagati Power Company (KPC), which will own and operate the plant when construction is complete.

The announcement of the financial close of the US$54 million debt finance package for the Kikagati brings closer a new source of electricity that will be equally shared between Uganda and Tanzania. The plant is located on the Kagera River, which is on the border between the two nations. 100% of the energy generated by KPC will be bought by the Uganda Electricity Transmission Company Limited, Uganda’s single-buyer and transmission organisation, which will then sell half the energy on to Tanzania.

EAIF is lending US$27 million 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$87 million.

Kikagati Power Company Limited is backed by the Africa Renewable Energy Fund, a US$205 million fund managed by Berkeley Energy The plant will 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.