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Projects

Summary of proposed guarantee

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Bujagali Energy Ltd.
Project ID
6732
Fiscal year
2013
Status
Proposed
Guarantee holder
ABSA Capital
Standard Chartered Bank
Investor country
South Africa
United Kingdom
Host country
Uganda
Environmental category
A
Sector
Power
Date SPG disclosed
May 02, 2013
Projected Board date
May 29, 2013
Gross exposure
 $18.0 million
Project type
Non-SIP
Strategic priority area
IDA
South-South
Complex Project

This summary covers requests from Absa Bank Limited of South Africa and Standard Chartered Bank of the United Kingdom, two of the existing senior lenders for the Bujagali Hydropower project. The two lenders will enter a swap arrangement with Bujagali Energy Limited to hedge against long-term interest rate risk. The lenders have requested MIGA coverage for the swap for a period of 11 years. The proposed coverage of $18 million is against the risk of breach of contract.

The Bujagali 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) (the project). MIGA is currently covering an equity investment in the project by World Power Holdings Luxembourg S.à.r.l. (WPH), an affiliate of Sithe Global (USA). The project was developed on a build-own-operate-transfer basis and reuses water flowing from two existing upstream facilities to generate electricity. The project was successfully commissioned in 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.

Environmental Categorization

The project is a Category A under MIGA’s environmental review procedures. For information on the environmental impact of the Bujagali project, please click here.

Development Impact

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 is increasing supply to the national power grid at the lowest cost compared to other power generation expansion options under Uganda’s energy strategy, thereby reducing outages and costs. The proposed swap arrangements will help stabilize the project’s interest expenses and related costs associated with the tariffs.

In addition to MIGA’s guarantees, 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.

 

 

 
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