Business
Evolution of the 250MW Bujagali damPublish Date: Oct 07, 2012
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By Ibrahim Kasita

The 250megawatts (MW) Bujagali hydropower plant started commercial operation on August 1, doubling Uganda’s electricity supply.

This was after successful completion of the mandatory reliability tests run for all the five units on June 13, which confirmed that the individual units were capable of delivering the unit contract capacity of 50MW, with five units operating together.

Kabagambe Kaliisa, the energy ministry permanent secretary, said the plant is meeting 49% of Uganda’s energy needs.

But Bujagali project started supplying electricity to the national grid in February when the first of the five units was commissioned.

The unit-by-unit commissioning was in response to the energy ministry’s strategic decision to replace the expensive thermal power generation at the earliest date and minimise loadshedding.

Cheaper electricity
The move was aimed at saving the money that was used to pay for the expensive thermal power operations.

The level of subsidy (payment for thermal power) had reached unsustainable levels and the cumulative amount of subsidy paid out was $9.5m per month.

During the four-year construction period, the project created about 3,000 jobs, improved community services such as clean water supply, education and health facilities in nearby villages.

Most important is that the project has preserved the environment, while bringing substantial benefits for Ugandans - increased electricity supply, lower electricity costs, improved air quality (generators switched off), jobs and improvement for nearby villages.

Public-Private Partnership
The project was established through a public-private partnership model between the Government, a consortium of the Aga Khan Fund for Economic Development (AKFED) and US Blackstone affiliates.

This partnership created the Bujagali Energy Limited (BEL), which will own the plant for a 30-year concession period before transferring it to Uganda for $1.

“The project serves as an example of successful private-partnership model, ideal for replication through the region,” Mahmood Ahmed, the Aga Khan Development Network country representative, said.

Best PPP model in the world
Uganda’s energy ministry has been nominated for the World Finance Public-Private Partnership Awards of 2013 for the good job done. Alex Reid, the executive director of World Finance, which is organising the awards, said the nomination is in recognition of the work on the Bujagali Hydropower Project.

“It is considered by the judges as an ‘exemplar of good practice’ and is in a very strong position to win,” he said.

The project lenders
Multi-lateral lenders funded the close to $900m power project. They include the World Bank Group, European Investment Bank, African Development Bank, Netherlands’ Development Finance Company FMO, Germany’s development banks KfW and DEG.

Commercial Banks included South Africa’s ABSA Capital and Standard Chartered Bank. The World Bank Group, through its agencies like the International Finance Corporation (IFC), International Development Association (IDA) and the Multilateral Investment Guarantee Agency (MIGA), is the leading project lender.

Bujagali timeline
1994: Bujagali hydropower project conceived as the leastcost project.

1996: In February, the Government signs a $450m pact with US power giant AES Corporation to undertake the project. AES was a joint venture with Madhvani International.

In March, the World Bank’s inspection panel approves the project and AES submits a draft Environment Impact Study (EIS) report to the National Environmental Management Authority (NEMA).

In November, AES announces that the project will deliver power by 2004. MPs approve the project.

In December, the cost of the project increases to $520m, which the Government and AES agree upon.

2002: In July
, AES uncovers a bribery scandal and a wrangle erupts between traditional healers and the Bujagali oracle over compensation funds. It was alleged that Richard Kaijuka, the World Bank’s associate director, was bribed $10,000 to support the project. This forced Kaijuka to resign.

In August, MPs begin querying the financial muscle of AES, hence delaying the project.

In June: Two construction firms Veidekke and Skanska pull out due to bribery and environmental controversies. The Government asks AES to lower the project cost.

In August, the World Bank reassures that it is going to fund the project. AES pulls out as the World Bank board is about to end the financial closure. The Government takes over AES’ assets.

In September, the Government invites new developers and says the project will be developed before the one at Karuma.

2005: In February, the Government drafts the evaluation criteria for proposals for the project’s development. Firms submit bids, but a consortium of Industrial Promotion Services (IPS) and Sithe Global emerge the best.

In December
, UETCL signs a power purchase agreement and implementation agreement with BEL.

In early April:
NAPE conducts its own public hearing against Uganda’s laws.

2006:
In mid-April, NEMA conducts a national stakeholders’ public hearing at Jinja, where the affected community is located and promises to release a final verdict before the end of April.

April 26-28:
The World Bank discusses the financial closure of the project.

In May:
The World Bank Board of Directors approved a $360m loan to cement its support of the construction of the dam

June:
The Government advances $90m to BEL to kick start and mobilise the equipment on site

August 21:
President Yoweri Museven and Aga Khan lay the foundation stone for the Bujagali hydropower project.

September:
The left hand side of the Bujagali Dumbell Island is blocked using cofferdams to provide room for construction of the power house.

2010 November:
Right hand side of the Bujagali Dumbell is Island blocked but water start passing the power station

December:
The contractor experiences unfavourable ground conditions (soft rocks instead of hard-rocks). Work is temporary delayed as the contractor digs out the soft rock to replace it with hard concrete cement to strengthen the integrity of the dam.

2012 February:
Unit 1 tested and commissioned on the national grid (Kiira thermal power switched off.)

March: Unit 2 is tested and commissioned to the national grid (Mutundwe thermal plan switched off)

April: Unit 3 tested and commissioned onto the national grid. (Power from Namanve and Tororo thermal power plants reduced significantly)

May:
Unit 4 tested and commissioned onto the national grid. (Day-time load-shedding eliminated completely

June 13: Unit 5 and final unit tested and commissioned on the national grid. (Day and night load-shedding eliminated).

August 1: Commencement of the Commercial Operations Date of the 250MW Bujagali Hydropower Project.

October 8:
President Museveni and His Highness The Aga Khan will officially inaugurate the 250MW Bujagali Hydropower Project coinciding with celebrations to mark 50 years of Uganda’s independence.

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