The government of Uganda under the Ministry of Finance, Planning and Economic Development has acquired a loan of 37.1 million Euros (Shs167 billion) from a French agency called Agence Française de Développement, or AFD.
Officials said the loan was for supporting a key project in the energy sector in line with Uganda Vision 2040 and the National Development Plan (NDP), which would lead to upgrading of a transmission line that will increase power reliability and enable exports of electricity.
The memorandum of Understanding was signed on Friday morning at the Ministry of Finance, Planning and Economic Development (MoFPED) boardroom in Kampala.
This 400KV transmission line upgrade will cover a distance of 130 km between the cities of Masaka and Mbarara.
Speaking at the signing ceremony, Finance Minister Matia Kasaija said that the “fund is expected to improve the Uganda electric network to allow increase of electricity transmission, enhance the security of electricity supply in South Western Uganda and contribute to the interconnection between Kenya, Rwanda and Uganda.”
Minister Kasaija added that the government will fulfil its obligations under the agreement to ensure that the funds are properly and exclusively utilised by the relevant government agencies for the activities earmarked.
French Ambassador to Uganda Stephanie Rivoal noted that Uganda’s energy sector is booming thereby this transmission line will enable Uganda to evacuate generated power internally within the country and will also allow exports of power.
Uganda currently exports power to Tanzania, Kenya, DR Congo, Rwanda and South Sudan.
She added: “The project today was initiated thanks to a feasibility study financed by the European Union infrastructure Trust Fund. AFD and kfW (Germany) are now partnering to jointly finance it. This is yet another common achievement and a symbol of European Union’s cooperation and associated efforts to support Uganda’s development.”
The event was also attended by state minister for Energy Simon D’ujang and AFD country representative Virginie Leroy.
Leroy said: “This loan is a good example of how together with KFW and with the support of European Union; AFD concretely supports Uganda in its contribution to the ‘sustainable energy for all’ initiative as well as to the ‘Uganda Contribution to Paris Climate Change Agreement’.”
Uganda’s current installed generation capacity is close to 900MW. Besides Karuma (600MW) and Isimba (183MW), developers are currently constructing many mini hydropower plants, which will add between 100MW and 200MW to the national grid.
In terms of exporting power, as of March 2017, Uganda was exporting 51.1 megawatts (MW) to Kenya, 14.94MW to Tanzania and 0.27MW to DRC.
The Minister of Energy and Mineral Development Eng. Irene Muloni also recently said government is in the last stages of approving an electricity free connection policy in major local areas all over the country as a way of improving electrification rates in the country.
Muloni said that government had realised that despite extending transmission poles to major rural areas in the country, majority of Ugandans were not connecting the electricity to their homes mainly because they didn’t have a connection fee.
“Despite all our efforts, electrification in Uganda is only at 22% which is very low. This is worrying for the ministry and the government. If we are to realise industrialisation and adding value to our goods, more areas and more Ugandans must be able to access electricity that is reliable and affordable,” Muloni said.