By John Kakande,
in New Delhi, India
THE Indian government is to finance the construction of the Ayago hydropower project in the north.
The $350m (sh620b) project will be implemented by the Indian governmentâ€™s power company, BHEL.
According to the Indian external affairs ministry Joint Secretary Narinder Chauhan, the firm has already signed a memorandum of understanding with the Ugandan Government.
Speaking to journalists in New Delhi on Tuesday, Chauhan said the project would be the first of its kind to be undertaken by her government in Africa.
She did not indicate the exact period when the project would be implemented.
The dam is expected to generate between 200 and 300 Mega watts of power after completion.
Chauhan, who is in charge of the East and Southern African affairs, revealed that the presence of a high level delegation from Uganda in India showed the excellent relations between the two countries.
The delegation led by Amama Mbabazi, the security minister, has been in India for the Mahatma Gandhi centenary commemoration conference which ended on Tuesday.
Chauhan said President Museveni had been invited to the conference, but was unable to attend due to pressing commitments.
She observed that Museveni was expected to visit India soon.
Chauhan praised Museveni, saying he had made Uganda a source of pride for Indians.