On June 10, 2019 MIGA issued a guarantee totaling $150 million to cover equity investment by SN Power Invest Netherlands B.V. in the Bujagali Hydropower project. The guarantee was issued for a period of up to 15 years against the risk of breach of contract.
The project involves operation of a 255 megawatt, run-of-the-river hydropower plant on the Victoria Nile by Bujagali Energy Ltd. (BEL). 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.
The Agency first supported this project in million to World Power Holdings Luxembourg S.à.r.l. (WPH), an affiliate of Sithe Global (USA), to cover its investment in the construction of Bujagali hydropower project. The coverage was issued for a period of up to 20 years against the risk of breach of contract. , following WPH’s increase of its equity investment in the project. MIGA’s cover to WPH has since been cancelled.
On million to 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 entered into a swap arrangement with Bujagali Energy Limited to hedge against long-term interest rate risk. MIGA’s coverage on the lenders’ swap was issued against the risk of breach of contract for a period of 11 years. MIGA’s guarantee for Standard Chartered Bank’s swap has since been cancelled.
The project is a Category A under MIGA’s Policy on Environmental and Social Sustainability. For information on the environmental impact of the Bujagali project, please click here.
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 increased 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.
In addition to MIGA’s guarantee, the World Bank Group is supporting the project with $222 million in loans and interest rate swap from the IFC and a partial risk guarantee of up to $115 million from the International Development Association.