In a statement, the bank said that it would be providing US$360M in loans and guarantees to the scheme, which is due to be commissioned in 2011. The run-of-river project is to be built on the Victoria Nile
The bank gave the breakdown of its supports for the approx US$800M hydro project as follows:
* A loan of US$130M from the bank’s private arm, the International Finance Corp (IFC), to the developer Bujagali Energy Ltd;
* A political risk guarantee of up to US$115M from the International Development Association to support the project’s commercial lenders;
* An investment guarantee of US$115M from the bank’s political risk mitigation arm, the Multilateral Investment Guarantee Agency; this is seen as a key factor in helping to secure equity backing for the project.
Bujagali Energy is a JV between Kenya-based Industrial Promotion Services (IPS) and US-based Sithe Global Power. IPS is the industrial development arm of the Aga Khan Fund for Economic Development, and Sithe is an international power development firm.
The World Bank also approved US$300M for power sector support until the Bujagli hydro project is commissioned due to electricity shortages. Recently, a report for the IFC concluded that the project would play a vital part of the least-cost expansion of the country’s generation capacity. The study was performed by UK-based consultant Power Planning Associates.
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