June 14, 2013 / 12:41 PM / 6 years ago

China revives Uganda's biggest power dam with $500 million credit

KAMPALA (Reuters) - China has provided credit worth $500 million to Uganda to help pay for the construction of a large Nile River hydropower dam at Karuma, a government document said on Friday, reviving the $2 billion project stalled for years by a lack of money.

Construction of the 600-megawatt Karuma dam is expected to start before the end of 2013 and likely to take five years to complete, the government has previously said.

It would be Uganda’s biggest hydro-electric dam, after the recently commissioned 250 MW Bujagali power dam, also on the Nile. Most of Uganda’s 550 MW power output comes from hydropower generation.

The project’s funding will come from government co-financing amounting to $700 million and $500 million from China, showed a 2013/14 budget document from the ministry of finance seen by Reuters on Friday. The government plans to raise the rest from other development agencies.

China, as elsewhere in sub-Saharan Africa, has rapidly expanded investment in Uganda in recent years, funneling vast sums into projects ranging from gleaming public office blocks to highways, hospitals and underground internet cables.

Uganda is banking on Karuma to generate cheap, sufficient power to meet fast-growing energy needs and support an economy eyeing double-digit growth rates once crude oil production starts, anticipated in 2017.

Reporting by Elias Biryabarema; Editing by James Macharia and Jeff Coelho

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