Uganda Calls For Bids For Construction Of 700MW Karuma Power Plant

Sunday, 21st November, 2010

UGANDA is searching for investors to build the 700MW Karuma hydropower project in efforts to ensure cheap and reliable power supply aimed at boosting economic growth.

The contractor, who will be selected under the international competitive bidding, is expected to start work early next year.

“Firms are free to form a joint venture/consortium for the supply, erection and commissioning,” Kabagambe-Kaliisa, the energy ministry permanent secretary explained.
“They should be financially sound not having litigation history or history related to non-performance of contracts.”

The new development follows the withdrawal of the Norwegian power firm, Norpak Power in 2008, after it went burst due to the global debt crisis and what it called “a protracted conflict with the World Bank.”

Since the firm had carried out extensive work on the project, Uganda negotiated to buy the project’s intellectual property rights, upgraded its capacity from 200MW to 700MW and repacked it for a public-private partnership project.

Although the project costs are not yet known, it is likely to hit more than $1.2b, energy experts estimated.

This is because of cautious approach willing investors are taking due to global economy uncertainties.

But Kaliisa argued that Karuma was one of the high priority projects in the national development plan.
“The Government has allocated funds under the energy investment funds towards the construction of the project,” he stated.

The project will be supervised and managed by the Uganda Electricity Generation Company who will be the Government nominee and licensee of the project.”

Uganda has for the past decade experienced erratic power supply coupled with high power rates, losses and low access, which make the country less competitive.

This was because the impressive economic growth registered in the 1990s was not matched by investments in the power sector as demand outstretched supply.

By 2004, the country was producing 120MW compared to the power demand of 380MW, causing power shortages.
To increase investments in the power sector and attract the private sector, the Government set up an energy investment fund in 2008.

This was aimed at providing public equity in partnership with the private sector for hydropower projects.
An initial sh191.3b was injected into the fund and used to kick-start the 250MW Bujagali hydropower project.

When setting up the fund, it was envisaged that the annual allocation would finance for example the 700MW Karuma hydropower project.

Kaliisa noted that the scope of work would include planning and engineering, civil construction and commissioning of the plant.

By Ibrahim Kasita -The New vision