On July 27, 2012, MIGA amended its guarantee to include an additional $5.3 million of coverage to World Power Holdings Luxembourg S.à.r.l. (WPH), an affiliate of Sithe Global (USA), insuring their additional equity investment in the Bujagali hydropower project. In 2007, MIGA issued a guarantee of $115 million covering WPH’s initial investment in the project. The investor has increased its equity investment due to additional costs associated with the project. The coverage is for a period of up to 20 years against the risk of breach of contract. This additional coverage brings MIGA’s gross exposure under the project to $120.3 million.
The project consists of the construction and operation of a 250 megawatt, run-of-the-river hydropower plant on the Victoria Nile by Bujagali Energy Ltd. (BEL), of which WPH is a partner. The project was developed on a build-own-operate-transfer basis and reuses water flowing from two existing upstream facilities to generate electricity. The first generating unit was commissioned in February 2012 and the project reached full capacity in June 2012. The project also includes an associated Interconnection Project, which consists of a series of transmission lines to be owned and operated by the Uganda Electricity Transmission Company.
Reliable and accessible electricity is critical for Uganda’s social and economic development. Daily power shortages have stunted economic growth by an estimated one percent of the country’s gross domestic product. The Bujagali project has increased supply to the national power grid and reduced the need for more costly thermal power..
In addition to MIGA’s guarantee, the World Bank Group is supporting the project with $130 million in loans from the IFC and a partial risk guarantee of up to $115 million from the International Development Association. MIGA’s guarantee was essential to securing Sithe Global’s investment.