Uganda hydro deal delayed

Disagreements between the government and a power development company have stalled plans to construct a 250 MW hydropower plant at Bujagali Falls in Uganda. Ministers have questioned clauses in the power purchase agreement (PPA) between Nile Independent Power and the government.

Construction work on the $500m project, which would double the country`s power capacity, has been delayed.

The unsigned PPA states that the Uganda Electricity Board must buy all the power generated by the project for a period of 30 years. Members of the parliamentary select committees on the economy and environment believe that the PPA will cause the government substantial financial losses, and have pledged to block its signing.

The project, near the town of Jinja, would generate revenues of $3bn in the first 30 years under the PPA. Nile Indepen-dent Power, a joint venture between Uganda`s Madhvani Group and AES of the USA, wants the government to bear the costs of maintaining water levels in the reservoir.

Norwegian firm Norpak Power has proposed construction of a 200 MW hydropower facility at Karuma Falls. Uganda may not need both projects and has invited the World Bank to investigate their economic feasibility and environmental impacts.