December 10, 2016 / 4:51 PM / a year ago

Uganda signs 90 million euro loan deal for dam

KAMPALA (Reuters) - (In Dec. 9 story, corrects third paragraph to show border is straddled by Lake Albert, not by river.)

Uganda signed a 90 million-euro ($95 million) loan deal with German development bank KfW and French government finance agency AFD on Friday to build a 45 megawatt (MW) power plant in the country’s west, where crude reserves have been discovered.

The east African country, which currently generates about 850 MW of electricity, has accelerated investments in its energy sector as it tries to raise capacity to at least 1,500 MW by 2018.

The planned power plant, known as Muzizi, will be developed on a small river in western Uganda that flows into Lake Albert which straddles the country’s border with the Democratic Republic of Congo.

In a joint press statement, KfW said it would provide a concessional loan worth 40 million euros and an additional grant of 5 million euros for the project, while AFD would extend a concessional credit worth 45 million euros.

The “Muzizi project will increase the current power generation capacity in Uganda by about 5 percent,” the statement said, adding electricity generated would be enough to power 1 million homes.

Uganda has discovered an estimated 6.5 billion barrels worth of crude reserves in the Albertine rift basin and commercial production is expected to commence in 2020.

China is also funding two major hydro power projects being developed along the Nile river with the largest of them, Karuma, expected to produce 600 MW upon completion.

Muzizi’s entire cost will reach 110 million euros, the statement said, and the government is expected to meet the extra funding.

Reporting by Elias Biryabarema; Editing by Aaron Maasho and Mark Potter

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