The New Vision newspaper in Kampala reports that the Electricity Regulatory Authority (ERA) has awarded a feasibility permit to Invespro, to carry out studies for a 100MW thermal power station.
Invespro, a joint venture between IPL Skandinavian of Sweden and MAN B&W of Germany plans to build, own and operate the heavy-fuel oil plant.
The permit allows a feasibility study to be carried out and allows issues of finance and environmental concern to be considered.
ERA chief executive, Frank Sebbowa explained on Monday "They applied for a permit and they got it. "A power purchase agreement has been submitted to us and we are still looking at it.
"But Invespro is still finalising some issues that will lead to the award of a generation licence."