A consortium of development finance institutions and commercial lenders has announced the completion of the refinancing of more than US$400mn loans of Bujagali Energy Limited (BEL), aiming to help reduce electricity costs in Uganda
The financiers include International Finance Corporation (IFC), a member of the World Bank Group, African Development Bank (AfDB), The Netherlands Development Finance Company (FMO), France’s Proparco, Germany’s DEG, The UK’s CDC and two commercial banks ABSA and Nedbank.
The refinancing package will extend the tenor of the bulk of the senior and subordinated loans originally provided in 2007.
Bujagali, a run-of-river hydropower project on the Victoria Nile, is one of the largest power generation plants in Uganda, contributing 45 per cent of the country’s annual electricity generation. It provides clean, reliable base-load energy.
This extension in tenor will reduce BEL’s annual debt servicing payments and make it possible for the company to reduce the cost of electricity produced by the hydropower plant over the next five years.
The project has support from across the World Bank Group and the AfDB. An existing partial risk guarantee from the International Development Association for two of the project’s commercial lenders remains in place.
Alongside the original financing for BEL, AfDB’s public sector window financed a transmission line project at Bujagali, the UECTL Bujagali Interconnection Project.
Bujagali’s commissioning in 2012 allowed the government to retire more than 100MW of diesel power plants and made it possible to nearly eliminate government subsidies to the electricity sector.
More than 90 per cent of Uganda’s electricity is now generated from renewable sources, making the Ugandan power grid one of the cleanest in the world.
