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Afreximbank entry makes Nyagak III financially viable

By Samuel Sanya

Added 19th November 2020 07:58 PM

African Export-Import Bank “Afreximbank” has come in with $10m (sh37.4b) after the exit of Kreditanstalt für Wiederaufbau (KFW), the German public development bank.

Afreximbank entry makes Nyagak III financially viable

Everything is coming together for the 6.6MW Nyagak III power dam on Nyagak River in Paidha sub-county, Zombo District. (Photo by Samuel Sanya)

African Export-Import Bank “Afreximbank” has come in with $10m (sh37.4b) after the exit of Kreditanstalt für Wiederaufbau (KFW), the German public development bank.

Everything is coming together for the 6.6MW Nyagak III power dam on Nyagak River in Paidha sub-county, Zombo District. Year-long negotiations between the government and the Kaal Paidha Umua Chiefdom to relocate "Mbkumbku", a local deity for rain finally reached a sh75m settlement, allowing works at the power dam to continue.

Furthermore, a new funder - the African Export-Import Bank "Afreximbank" has come in with $10m (sh37.4b) after the exit of Kreditanstalt für Wiederaufbau (KFW), the German public development bank. 

The $19.4m (sh72.6b) project is being developed by the Uganda Electricity Generation Company Limited (UEGCL) and Genmax, a consortium of strategic partners Dott Services, Tata Consulting Engineers and Hydomax Limited. 

Currently, the works at Nyagak III power dam are at around 22%. (Photo by Samuel Sanya)


The New Vision's Samuel Sanya spoke to the Genmax Nyagak CEO, Brian D'ujanga about developments at the project. Below is the conversation. 

Q. What is the current status of the Nyagak III project? 

Currently, the works are at around 22%

Q. How much has UEGCL invested in the project since the exit of KfW? 

UEGCL committed to fund project works with support from Government of Uganda to a tune of $8m (sh29.6b) and is set to contribute $1.7m (sh6.3b) as part of their equity and grant funding to the project in line with government releases. They have however provided project land, compensations to Project Affected People and payment for the Independent Engineer for monitoring and design review costs.

The $19.4m (sh72.6b) project is being developed by the Uganda Electricity Generation Company Limited (UEGCL) and Genmax. (Photo by Samuel Sanya)


Q. How much have Strategic Partners under Genmax spent on the project so far?

So far Strategic Partners have spent approximately $5m (sh18.5b); $2.34m of which is equity and the rest is in form of bridge financing to the project before other funds come in

Q. What does the entry of Afreximbank mean for the project?

Afrexim entry brings the debt funding component and means that the project development shall be fully financed. In addition, the project is financially viable.  

Q. What took the discussions with the Kaal Paidha Umua so long to complete? How have costs increased? 

As part of UEGCL's mandate, they are to provide the land for the project. They were handling the discussions with the Kaal Umua. Being that UEGCL is a Government entity, there are procedures that they followed which might have caused the long duration. The service providers have not yet submitted their claims but it is presumed that delay events are associated with costs.  

The African Export-Import Bank "Afreximbank" has come in with $10m (sh37.4b) after the exit of Kreditanstalt für Wiederaufbau (KFW). (Photo by Samuel Sanya)


Q. Going forward, will works be completed on time for commissions in 2022? Did COVID-19 impact project timelines?

COVID-19 did affect timelines for the project. With lockdown, movement was difficult and this slowed down the works considerably. The intention is to finish in time for commissioning in 2022 as planned. We shall be accelerating the works once the funds are available and hope to meet the target.

We are grateful to the government for the support through UEGCL and we pledge to finish the project in time. We also appeal for the government grant and equity contribution to come quickly.

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