Chinese plan to build US$1.4b hydropower dam on River Nile

By George Mangula

A Chinese firm recently applied for a license in Uganda to develop a US $1.4 billion hydropower plant that could potentially expand the country’s generation capacity by 40 percent in the near future if completed.

Julius Wandera, spokesperson for Electricity Regulatory Authority (ERA) recently said that the authority has already called for comments from the public on the proposed project.

According to its license application, the firm, POWERCHINA International Group Limited (PIGL), wants to develop the Ayago Hydroelectric Power Station, located on a section of River Nile between the lakes Kyoga and Albert. ERA licences all power generators in the country and is also responsible for setting generation and end-user power tariffs. The Ayago power plant will have a capacity of 840MW and, when successfully developed, would be Uganda’s largest power plant.

The Karuma hydroelectric dam, upstream of Ayago and due to be completed early this year by China’s Sinohydro Corporation, is currently Uganda’s largest power project. Wandera said that alongside the solicitation of public views on the project, ERA would also conduct its own due diligence on POWERCHINA International to ascertain whether it has the financial and technical capacity to execute the project.

“By April we should be communicating our final decision on their application to them,” he said. According to their application, the firm plans to raise funds for the project through a 25 percent-75 percent mix of equity and debt.

The project could potentially increase Uganda’s generation capacity by 40 percent to about 2, 800 Megawatts, according to figures from data available from the Ministry Energy and Mineral Development.