President Yoweri Museveni has Tuesday met with a team of the International Finance Corporation, a member of the World Bank Group. Cheikh Oumar Seydi, the regional director Eastern and Southern Africa, led the group.
According to the Senior Press Secretary Don Wanyama, an array of issues was discussed but key being the cost of power from Bujagali Dam, that is priced at 11.3 US cents per unit. The President indicated that this price was exorbitant and was hampering the country’s industrialization drive. The desirable price, he said, should be 5 US cents per unit.
IFC was one of the key funders of the Bujagali Dam.
The team was said to be in agreement with President Museveni and more discussions will be held in the near future to resolve this.
In his strategic guidelines to the new cabinet in June, President Museveni listed bringing down the cost of Bujagali power as one of the government’s key deliverables.
Power from the dam owned and operated by Bujagali Energy Ltd (BEL) costs $0.1152 per kilowatt-hour and is set to rise from next year to a peak of $0.15/Kwh by 2022, but the government wants to reduce the cost to $0.05 to lower the end-user tariff and make the country’s industries competitive.
Government officials have outlined a raft of measures aimed at reducing the cost of power at the dam, including de-risking the dam, restructuring and refinancing the debt to a lower interest rate, and reducing the return on investor’s equity.
Bujagali currently supplies about 46 per cent of Uganda’s generation mix but the take-or-pay nature of BEL’s power purchasing agreement with the government and its higher tariff relative to two older dams means that its costs represent 65 per cent of the weighed average end-user tariff.
