The 14MW Kikagati hydropower station being built on the border between Uganda and Tanzania has reached financial close, Emerging Africa Infrastructure Fund (EAIF) announced.
This milestone means 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 $54 million debt finance package for the Kikagati hydro-electricity station 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.
One hundred per cent 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 executive director, Emilio Cattaneo, commented: “Kikagati hydropower station is the 10threnewable energy plant that the EAIF has supported in Uganda. EAIF was a pioneer in financing private sector renewable energy projects in Africa.”
Cattaneo added: “We are helping companies and countries stimulate long-term economic development impact on business growth, jobs and skills and contributing to weakening the grip of poverty on communities.”
EAIF is lending $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 $87 million.
Kikagati Power Company Limited is backed by the Africa Renewable Energy Fund, a $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.