Building Bujagali

1 April 2010

The Bujagali Hydropower Project (HPP) is a 250MW power-generating facility being built on the Victoria Nile River near the Town of Jinja, in Uganda, by Bujagali Energy Limited (BEL). It is sponsored by Industrial Promotion Services (Kenya) Limited and SG Bujagali Holdings Ltd, an affiliate of Sithe Global Power, LLC (USA). An associated power transmission system, the Bujagali Interconnection Project, is a separate but associated project sponsored by Uganda Electricity Transmission Company Limited (UETCL) that will distribute the hydro electricity to the Ugandan power grid.

The hydro power project will produce substantial benefits for Uganda and for citizens living in the area of the facility.

Uganda has a severe shortage of electricity – less than 5% of Uganda’s population has access to electricity - and the country has an acute need for new power sources. Many electricity consumers regularly experience rotating blackouts of up to 12-24 hours daily. This lack of power has substantially impeded investment, private sector development, and economic growth. The Bujagali scheme is an integral part of Uganda’s strategy to tackle this crisis.

According to BEL, the project's principal macro benefits for Uganda include:

• New supply of clean, reliable energy.
• Lower electricity costs.
• Reduced electricity rationing.
• Increase in economic investment and national income.
• Increase in export revenues.
• Possible support for rural electrification programs.
• Income from the sale of carbon credits.
• Improving local communities.

The facility will also benefit the residents and economies of local communities near the project site. New jobs, primarily unskilled and semi-skilled, will create employment opportunities for Ugandan workers. An estimated 1,000 - 1,800 workers will be employed at peak times during the four-year construction period. In recruiting workers, the project team will give preference to local residents living in the area near the project.

BEL says it is committed to providing additional sustainable benefits, primarily for the local region affected by the project. Our Community Development Action Plan supports long-term development initiatives on both sides of the river: Wakisi Subcounty (west bank) in the Mukono District and Budondo Subcounty (east bank) in the Jinja District.

It hopes to invest as much as $2.4M in community action initiatives. The major features of the current proposed community development plan includes improving local facilities, such as water supply, schools and health care facilities.

Extensive review

BEL filed a draft Social and Environmental Assessment (SEA) for the hydro power project with the Government of Uganda and prospective project lenders in December 2006 (although the project was originally conceived in the early 1990s). The SEA underwent a comprehensive review by Uganda's National Environmental Management Authority (NEMA) and by project lenders including The World Bank, European Investment Bank, African Development Bank and others. The SEA for the associated interconnection project sponsored by UETCL also underwent government review.

The purpose of the SEA process was to ensure the proposed facility is designed and developed to maximize its benefits while minimizing potentially negative social and environmental effects.

Some of the environmental mitigation and monitoring measures currently planned include:

• Alternative water supplies (groundwater wells, piped water, etc.) for villages with restricted access to the river.
• Native vegetation planted on islands and riverbanks in the new Bujagali reservoir
• Water quality monitoring during and after construction.
• Monitoring of fish stocks in the new reservoir and the downstream river, and the re-stocking of native fish species, if necessary.
• Environmental measures -- e.g., enrichment planting of forest reserves and islands -- and tourism amenities at the downstream Kalagala Falls site.
• Alternative raft launching and exit facilities for white water rafting enterprises.
• New tourism facilities in the Bujagali area (cultural heritage facilities, dam visitors center, picnic site, etc.).
• Traffic management, environmental monitoring and management programs to minimize the effects of construction.

Following their extensive review of the SEA, the Ugandan government and project lenders approved the project in April 2007. The Bujagali Hydropower Project achieved financial closing in December 2007, and is expected to take up to 42 months to construct. The associated interconnection project will be completed prior to the commencement of hydro power facility operations.

Project data

The Bujagli project will develop a gross head of approximately 22m and includes:

• A main spillway with two radial gates and one flap gate
• An emergency spillway
• A 30m tall rockfill/earthfill embankment-type dam
• A concrete gravity dam
• A concrete powerhouse structure with an integral intake
• Five Kaplan turbines
• Five generators
• A 132kV substation

Project costs

The project cost of Bujagali is currently estimated at US$799M. Back in April 2007, the World Bank announced it had approved US$360M in loans and guarantees for the project. This is comprised of US$130M in loans from IFC, the private sector arm of the World Bank; a partial risk guarantee of up to US$115M from the International Development Association for the benefit of the project’s commercial lenders; and an investment guarantee of up to US$115M from the Multilateral Investment Guarantee Agency, the World Bank’s political risk mitigator. Funding of US$135M as also been agreed by the European Investment Bank for the scheme, while the African Development Bank has also agreed loans of US$110M for the scheme, and US$30M for the interconnection project.

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