MY OPINION ON THE DESIGN, IMPLEMENTATION AND COMPLETION OF BUJAGALI INDEPENDENT POWER PROJECT IN UGANDA AS A PPP.

According to Electricity Regulatory Authority (ERA 2008), the Bujagali Project is a private power generation project targeted to generate 250 MW run-of-the-river hydro-electric power after completions on the Victoria–Nile on Dumbbell Island, Jinja, Uganda. The project achieved its financial closing in December 2007, and was expected to be commissioned in 2011. Bujagali is the first Independent Power Project (IPP) in Uganda, and the largest mobilization of private financing for a power project in Africa and was named “Africa Power Deal of the Year 2007” by Project Finance magazine. The rationale of the project was to address the severe shortage of electricity in Uganda that is purportedly has contributed to a decline in GDP growth to around 5% in2005/06 (Ministry of Energy and Mineral Development Annual Report, 2010). The government of Uganda lacked the necessary technical expertise and financing to complete the project on its own calling for private sector participation to fill the gap. By the time of its conception and implementation, the Bujagali project was a PPP between the private sector project sponsors represented by Bujagali Energy Ltd (BEL), the government of Uganda, including the Ministry of Energy and Mineral Development (MEMD) and Uganda Electricity Transmission Company Limited (UETCL), multilateral and bilateral development financial institutions, and commercial lenders, including Absa Capital (South Africa) and Standard Chartered Bank (UK). BEL, a special-purpose company (SPC), is incorporated in Uganda, and is privately owned by Industrial Promotion Services (Kenya) Ltd (IPS (K)), the industrial development arm of the Aga Khan Fund for Economic Development (AKFED) and SG Bujagali Holdings Ltd (Mauritius), an affiliate of US-based Sithe Global Power LLC. The hydro power project sponsors were selected through international competitive bidding procedures. Consequently, the project was developed, financed, constructed, and maintained by BEL on a BOOT basis. BEL also manages the construction of the Interconnection Project on behalf of UECTL, which would own and operate the project (Ministry of Energy and Mineral Development Annual Report, 2010). By and large Bujagali power project has been a successful Public-private partnership. . The reasons for the success of this PPP project include the following; i. The project was systematic. It involved 6 stages namely; project development, expression of interest, Request for proposals, negotiation and completion, contract management, end of the project. ii. The project was technically feasible. This was also innovatively proposed by Bujagali Energy Limited after a thorough research and also being a technically sounding company in power generation. iii. There was thorough stakeholder analysis that was carried out and generally the stakeholders accepted the project. iv. There was an enabling PPP policy in Uganda that made the process more easy. v. There was transparency in the bidding, procurement and the general process of the PPP. vi. There was thorough and realistic cost/benefit assessment of the projects involved. vii. There was a strong monitoring and evaluation (M&E) system for the project implemented. viii. The risk assessment was clearly assessed and distributed according to who is in position to manage the it very well. IPP, BEL would sell the electricity to Uganda Electricity Transmission Company Limited (UETCL), Uganda’s national transmission company, under a 30-year power purchase agreement (PPA ix. Lastly there Government involvement by providing guarantees. The total cost for the integrated projects, about $800 million, being mobilized on a limited recourse basis, through equity and debt in the ratio of 22:78.