Emerging Africa Infrastructure Fund (EAIF) and the Dutch Development Bank (FMO) will provide USD29.3 million (Shs105.48bn) to refinance the Bugoye Hydro-electric Power Station in Uganda according to a new agreement the two establishments have signed with the Central Bank.
With EAIF and FMO, each providing 50%, the financial boost will facilitate a Senior Debt with a 12-year term to refinance the 13MW Bugoye hydro-electric power plant in Bugoye, Kasese district in Western Uganda.
The plant, which has 98% availability, has been producing electricity since 2008. It feeds power into Uganda’s national grid.
The refinancing agreements were signed on July 13, with financial close expected around four weeks from the date of signing.
EAIF has supported 8, and FMO 10, Ugandan renewable energy projects in hydro- and solar power over the past 10 years.
Together these facilities will account for up to 39% of Uganda’s installed generating capacity.
Proceeds from the refinancing will be used to repay EAIF the balance of its original loan to the project, fund repair works, and repay construction loans made by the project sponsor (and indirectly, the 100% shareholder in Bugoye) – the Africa Renewable Energy Fund (AREF) – managed by Berkeley Energy.
AREF is to use the refinancing proceeds to invest in other Greenfield hydro-electric plants in Uganda.
Nazmeera Moola, head of EAIF at Investec Asset Management (IAM), says the refinancing is very good example of how a successful power generation facility can be used to mobilize fresh capital to build new capacity.
She continued, “In refinancing Bugoye, EAIF and FMO are freeing up capital that AREF will use to develop Greenfield renewable power stations. That will add to Uganda’s economic potential by increasing the country’s generation capacity, and creating new jobs in construction and plant operation.”
“We have been able to have added developmental impact because Bugoye is an established, efficient and viable business with a suitable risk profile. In backing the project, the leaders of EAIF and FMO demonstrated strategic, long-term, thinking and wholly constructive commercial flexibility,” Moola added.
Details of the new project are expected to be announced later in 2017. EAIF is the Mandated Lead Arranger of the Bugoye refinancing, which was undertaken by EAIF’s managers, IAM, EAIF and FMO each contributing 50% of the US$29.3 million loan facility.
Nicholas Tatrallyay, Investment Manager at Berkeley Energy says: “the Bugoye refinancing is one of the first refinancings for small hydro projects on the continent and is an important milestone for Uganda’s renewable energy sector.”
Tatrallyay maintains that the Bugoye refinancing will allow AREF to invest additional capital into Uganda and further expand its portfolio of hydro projects in the country.
EAIF and FMO are two of the most experienced and skilled providers of energy infrastructure finance in Africa. Both institutions have shown an ability to bring not only finance but real commitment to Africa’s economic progress.