Uganda to Construct a 600 MW Dam On the Nile River

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Bujagali Dam Uganda photo

Uganda’s recently constructed Bujagali Dam

AFRICANGLOBE – The Ugandan government is confident that China will provide funding to finance the construction of a 600-megawatt Karuma hydro-power plant on the River Nile, marking a major breakthrough for the long-delayed project, the state minister for energy and minerals development told news outlets on Monday.

The $2.2 billion plant is major development milestone for war-ravaged northern Uganda, which is slowly recovering from a two-decade civil conflict involving the rebel group Lord’s Resistance Army, led by fugitive war lord, Joseph Kony.

“Very soon, we shall be starting negotiations we intend to enter a bilateral agreement with China for a concessionary loan for the project,” said Simon D’ujang.

The Chinese government offered to finance the project after a meeting between the Ugandan president, Yoweri Museveni, and Chinese President Xi Jinping on the sidelines of the BRICS summit in South Africa last month, Mr. D’ujang said. The Chinese embassy in Uganda was unable to comment immediately on the subject.

The Karuma project, first announced in 2010, has faced delays due to a shortfall in government funding. Plans to issue a $500 million Eurobond to bridge the funding deficit were put on hold in 2011, mainly because of financial turmoil in the euro zone.

State-owned China International Water & Electric Corp. is one of the companies pre-qualified to build the hydro power plant. Under the new funding terms, China is expected to provide a contractor for the project in the next six months, to enable construction to start before the end of the year, according to Mr. D’ujang.

Chinese investment in Uganda has been on the rise in recent years after the discovery of huge oil reserves in the Lake Albertine Rift Basin. Exim Bank of China is funding a $350 million toll road project linking the Ugandan capital to Entebbe International Airport, while China’s Cnooc Ltd. is developing the country’s oil fields with its joint venture partners, the U.K.’s Tullow Oil PLC (TLW.LN) and France’s Total SA (TOT).

Karuma will be constructed along the River Nile, in the Murchison Falls National Park, within the Lake Albertine rift basin.

 

By: Nicholas Bariyo