Uganda Awards Sinohydro Contract to Build Karuma Hydro Project

Uganda awarded Sinohydro Group Ltd. (601669) of China the contract to build the country’s biggest electricity plant on the Nile River after years of delays.

“The contract was awarded,” State Minister for Energy Simon D’Ujanga said today by phone from Uganda’s capital, Kampala, declining to provide further details.

Construction of the 600-megawatt Karuma hydroelectricity dam will begin next month and it will start producing power by 2018, the Kampala-based New Vision newspaper reported today, citing Energy Minister Irene Muloni. The contract is worth $1.65 billion and involves building a transmission line to Kawanda, outside the capital, Kampala, the newspaper said.

Uganda’s government announced a plan in 2009 to construct the Karuma plant on its own after talks for Norway’s Norpak Power Ltd. to develop the site collapsed a year earlier.

The project has since missed multiple stated deadlines to commence as the government sought investors. Uganda announced March it had canceled the winning bid for the project after discovering irregularities in the procurement process.

China has offered $500 million of credit on concessional terms for the project, Uganda’s Finance Ministry said last week.

Uganda, East Africa’s third-biggest economy, has installed capacity of 810 megawatts, while peak demand is estimated at 509.4 megawatts, according to the Electricity Regulatory Authority.

Industrial consumers, including the domestic units of Coca-Cola Co. (KO), the world’s biggest beverage company, Lafarge Cement SA (LG) of France and the government, use at least 70 percent of all power, according to Umeme Ltd., the power distributor.

Uganda discovered oil in 2006. London-based Tullow Oil Plc (TLW) and partners China National Offshore Oil Corp. and France’s Total SA (FP) are jointly developing the country’s oilfields, which they estimate as having 3.5 billion barrels.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

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