Emerging Africa Infrastructure Fund signs loan for 14 MW hydropower project on the border of Uganda and Tanzania

The Emerging Africa Infrastructure Fund has announced the signing of a US$27 million loan to Kikagati Power Company Limited, which is building a 14 MW run-of-the-river hydro electricity generating station at Kikagati on the Kagera River. KPCL is backed by the Africa Renewable Energy Fund, a fund managed by Berkeley Energy.

100% of the energy generated will be bought by the Uganda Electricity Transmission Company Limited, Uganda’s single-buyer and transmission company, which will then sell half the energy on to Tanzania.

The plant is to consist of an 8.5m-high dam of 300m in length, three turbines of 5.5 MW each and associated earthworks, control and plant rooms and allied infrastructure connecting the plant to switchyards in Uganda and Tanzania. Around 250 people are involved in construction work. Once operational, around 10 permanent staff will run the plant.

FMO, the Dutch development bank, was mandated lead arranger of the project financing, and is lending US$27 million. The EAIF and FMO loans are over 16 years, a term that improves the long-term viability prospects of the project.

The Kagera River on which Kikagati is located forms the natural border between Uganda and Tanzania. The Project has been made possible through the close collaboration of the developer with the two governments.

Royal Haskoning served as the lender's Technical Advisor; Clifford Chance as International Counsel; Mukumbya Musoke Advocates as Local Counsel; and Indecs and BDO as Insurance Advisor.