On 9th December 2016, German Development Bank KfW on behalf of the German Government and the French Development Bank AFD on behalf of the French Government both signed agreements with the Ministry of Finance, Planning and Economic Development for the construction of the Muzizi Hydropower Project. KfW will provide a concessional loan of EUR 40 million and a grant of EUR 5 million while AFD contributes a concessional loan of EUR 45 million. The Republic of Uganda will contribute an equity contribution of about EUR 20 million to ensure full financing of the project. The total costs are estimated to be EUR 110 million.
The Muzizi Hydropower Project is being developed at the lower course of the Muzizi River, south east of Lake Albert located in Kibaale District, western Uganda. However, government officials say the project footprint will extend to districts of Kabarole, Kyenjojo and Ntoroko. It is designed as a run-of-the river power plant with an installed capacity of 44.7 MW and a total annual energy production of 220GWh when completed.
The Muzizi project will be developed by Uganda Electricity Generating Company (UEGCL). UEGCL has already contracted the international consultant ILF Austria to complete the technical design of the project and support the procurement of a construction company. Construction works are expected to commence in 2018 and commissioning of the power plant in 2021.
Speaking the during the signing ceremony between Uganda, Germany and France in Kampala on 9th December 2016, Finance minister, Hon. Matia Kasaija, said the total project cost is estimated at 110 million Euros, out of which KfW of Germany is providing 40 million Euros while French Development Agency (AFD), is providing 45 million Euros. At the same time KfW will provide grant funding of 5.25 million Euros.
Hon. Kasaija said the Finance ministry has committed to provide counterpart funds for both on-going projects and projects to come on board. He added: "I want to caution Uganda Electricity Generation Company Limited to make sure that the purpose of these funds is realised."
Speaking on the behalf of the donors, French ambassador to Uganda, H.E. Stephanie Rivoal, said, "The objective of the project is to meet the energy needs of Uganda's population for social and economic development and improve the quality and security of power supply in the country."
The Muzizi project will increase the current power generation capacity in Uganda by about 5%. The project will generate enough electricity to supply about 1 million people in Uganda with clean electricity from hydro power. This creates an important precondition for rural electrification and economic development in the project area. The project will also contribute to a sustainable growth pattern for the country and save 123,000 tons of CO2 emissions by replacing expensive and environmentally unfriendly diesel generators.