Uganda in talks in China to fund Karuma dam project
Engineering & Technology Magazine, 15 April 2013
By Sofia Mitra-Thakur
Uganda is negotiating with China to obtain funding for construction of a
Nile River hydro-power dam at Karuma, a project that is expected to
generate 600 MW of electricity, a senior official has said.
China - as elsewhere in sub-Saharan Africa - has rapidly expanded
investment in Uganda in recent years, funnelling vast sums into projects
ranging from gleaming public office blocks to highways, hospitals and
underground internet cables.
"We have begun negotiations with China to offer us credit to fund the
(Karuma) project," junior Energy Minister Simon D'ujanga said.
"We hope we'll get them to agree to help us and once they give us the
money they will also supply the contractor so that we don't have to go
through protracted procurement procedures."
New Vision, a state-owned daily, reported earlier that President Yoweri
Museveni had discussed the Karuma project with Chinese President Xi
Jinping during a summit of BRICS emerging economies in South Africa last
month. The Chinese leader voiced "a willingness to fund the dam", the
Construction of Karuma is likely to take five years and cost around $2
billion. It would be Uganda's biggest hydro-electric dam, after the
recently commissioned Bujagali dam, also on the Nile. Most of the
country's energy is hydro-electric.
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.
The east African nation discovered hydrocarbon deposits near its western
border with the Democratic Republic of Congo (DRC) in 2006. Reserves are
estimated at 3.5 billion barrels.
Energy officials say the internal rate of return for energy projects in
Uganda is fairly attractive at between 15-18 per cent and higher than
South Africa's 12-14 per cent, although Uganda has a higher risk perception.
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