Business
Uganda and Aga Khan inaugurate Bujagali Hydropower plant, established through a unique public-private partnership
Bujagali Hydropower Plant
(Business Wire) – Completion of project showcases successful public-private partnership for infrastructure development, bringing together the Government of Uganda, Industrial Promotion Services (IPS – the infrastructure and industrial development arm of the Aga Khan Fund for Economic Development) and Blackstone Portfolio Company, Sithe Global.
The 250MW hydropower plant has nearly doubled Uganda’s electricity supply and virtually eliminated power shortages and blackouts.
The total project cost is approximately US$900 million.
Uganda President, Yoweri Kaguta Museveni, today inaugurated the 250MW Bujagali Hydropower Plant in the presence of the Aga Khan and project partners Sithe Global, a company majority owned by a fund managed by Blackstone on behalf of its investors.
The inauguration of the plant took place on the eve of celebrations marking 50 years of Uganda’s independence.
The plant, was jointly funded by Industrial Promotion Services (IPS), the infrastructure and industrial development arm of the Aga Khan Fund for Economic Development, Sithe Global Power LLC (USA), a company majority owned by Blackstone Capital Partners IV, L.P., a fund managed by Blackstone on behalf of its investors, and the Government of Uganda.
It has eliminated Uganda’s previous energy shortage by nearly doubling the country’s effective generation capacity (it currently meets 49 percent of the country’s energy requirements) and provides clean, reliable power at lower costs than existing power generating facilities.
Construction of the plant commenced in August 2007. It comprises five units of 50MW each, commissioned in phases between February 2012 and June 2012.
Bujagali represents one of the largest privately-funded power sector investments ever made in Sub-Saharan Africa and sets a unique precedent for public-private partnerships.
The plant will be operated by Bujagali Energy Limited (BEL), a company established by the project partners to operate and manage the plant, for a 30 year period, following which it will be transferred to the government of Uganda for a nominal price of US$ 1.
Uganda’s electricity demand has been growing by 10 percent every year, while supply prior to the commissioning of Bujagali has remained stagnant. Frequent power shortages and blackouts accounted for between 1 to 1.5 percent loss to Uganda’s gross domestic product (GDP), thereby slowing the country’s economic development.
Since the first unit became operational in February 2012, Bujagali has provided a reliable solution to Uganda’s power demands, serving as a catalyst for economic growth and replacing emergency thermal generation costs, thereby saving US$ 9.5 million per month in government subsidies.
Commenting on the role of the Aga Khan Development Network, His Highness the Aga Khan, said, “But let me emphasize that this has also been a global story. As we try to count up the key participants, we find that they come from at least 37 different countries – a truly international network of partners. Those of us who represent the Aga Khan Development Network are proud to have been associated with so many fine allies in this work, including our close, central partnership with Sithe Global and Blackstone.” The project serves as an example of a highly successful public-private partnership model, ideal for replication throughout the region.
Africa is a resource rich continent and is primed for the development of hydroelectric power generation facilities like Bujagali. On behalf of our investors, Blackstone has committed billions of dollars of equity capital to build energy businesses on four continents around the globe and will continue to invest in emerging market countries to provide them with the affordable, safe and reliable energy to sustain their economic growth.” The Bujagali Hydropower Project has already impacted the surrounding communities with the creation of approximately 3,000 new jobs for Ugandan workers during peak construction; improved community services such as clean water supply, education and health facilities in nearby villages; the provision of micro-credit funds to surrounding rural populations and the enhancement of infrastructure.
Bujagali will yield an average of 900,000 Carbon Dioxide Emission Reductions (CERs) annually, putting it at the forefront of clean energy efforts.
The project was also made possible by support from a number of other lenders: International Finance Corporation (“IFC”), the European Investment Bank, African Development Bank (“AfDB”), Nederlandse Financierings-Maatschappij voor Ontwikkelinsslanden N.V.
Barclays/ABSA Capital and Standard Chartered Bank are providing commercial debt under an International Development Association (“IDA”) Partial Risk Guarantee, while MIGA is providing insurance guarantee cover for Sithe Global’s equity.