This past Monday I was present as the 250 megawatt Bujagali hydropower plant on Uganda’s River Nile – supported by MIGA, as well as our sister institutions the World Bank and IFC – was commissioned into active service.
After many years of preparation and planning, this was an auspicious moment indeed for Uganda, with the plant’s opening coinciding with the Jubilee celebrations marking the country’s 50 years of national independence. The new Bujagali power plant comes close to doubling the country’s electricity capacity and in a single step has elevated Uganda to having the second largest kilowatt consumption per capita in East Africa, following Kenya.
President Yoweri Museveni presided over the opening, which was attended by a large audience including the heads of state of Burundi and South Sudan, His Excellency the Aga Khan, members of the Ugandan Parliament, representatives of the international diplomatic corps and other dignitaries. During the ceremony, President Museveni stressed the crucial need for electricity, noting that with so little achievable in today’s world without power, it is “a waste of time” to think about development without electricity.
The $900 million project is a large scale run-of-river plant that has been realized through an effective and well-designed public-private partnership model between the Government of Uganda and a consortium consisting of Sithe Global, a U.S. company majority owned by The Blackstone Group, and Industrial Promotion Services (IPS), owned by the Aga Khan Fund for Economic Development. This partnership created Bujagali Energy Limited, which will own the plant for a 30-year concession period before transferring it to Uganda for $1.
The benefits to the Uganda people are truly considerable. The new electricity has allowed older less efficient and less clean thermal power plants to be switched off, and has all but eliminated blackouts and load shedding. During the construction period, the project created about 3,000 jobs and brought many valuable services to the local communities such as clean water, education facilities, and health clinics. Most important is that this is a long-term, sustainable project with a low environmental impact, which will be bringing substantial benefits for Ugandans in the form of reliable electricity at lower costs.
This project was first contemplated as far back as 1994, when the site was formally identified as a least cost project. After a number of miss-starts, it was only in 2005 that the Sithe Global and IPS were selected through a bidding process to be the project developers, and it was in late 2006 that the foundation stones were laid. Since then the progress has been steady and sure.
The success of pulling off this highly ambitious project undoubtedly can be attributed to the breadth and depth of the many project participants. The strength and far-reaching experience of the sponsors was an integral element in keeping the project well managed and on track. It was also necessary to pull together a wide range of lenders, including a strong contingent from the multilateral community -- the World Bank, the IFC, the European Investment Bank, the African Development Bank, the Netherlands’ Development Finance Company FMO, Germany’s development banks KfW and DEG – and two leading commercial banks, ABSA Capital, and Standard Chartered Bank. And through it all, the Ugandan Government and President Museveni have made the successful development of this project a national priority.
This degree of partnership and cooperation over a five-year period proved absolutely necessary to bring all the moving parts together and get from concept to completion. To give just one example of the scope of the challenges involved, HE the Aga Khan commented how in order to connect the plant the 100 km to the grid it was necessary to traverse 2,632 separate land parcels – just one set of issues that had to be negotiated as part of this vast endeavor.Seeing Bujagali come on line, it is impossible not to be overcome by tremendous optimism and the belief that if a project of this complexity can be realized, then anything is possible.
The Bujagali project is going to serve as both a model and an inspiration for achieving large-scale infrastructure projects in highly challenging environments. From MIGA’s perspective – we are delighted to have played a critical role by providing guarantees to Sithe without which their investment would not have gone forward. As the continent's demand for power constantly rises, we look forward to being involved in many more such transformational deals.