Chinese government owned Exim Bank, the main financiers of the ongoing 600 MW Karuma Dam project has finally signed the much awaited advance payment guarantee for the funding of the project.
According to a document titled ‘Advance payment Guarantee No. BKD2014LG00120’ issued on 10th June 2014, and addressed to Ministry of Energy and Mineral Development and signed by Zhang Dajin on behalf of Exim Bank Head office, the bank agrees to cover Sinohydro Corporation, Karuma Dam contractors with a guarantee.
SinohydroCorporation has already committed its own funds for the ongoing construction works at the project site ahead of the release of funding by the government of Uganda.
Last month the Chairman and President of Exim Bank of China Mr. Li Ruogu was in Uganda to meet President to confirm and present details of the project funding.
Sources within Ministry of Energy and Mineral Development have confirmed that a delegation of government officials from the two Ministries of Energy and Financeled by Ministers Maria Kiwanuka and Irene Muloni and including their Permanent Secretaries, Keith Muhakanizi and Kabagambe Kalisa respectively are in China to discuss the release of the balance of the 85% expected to be concluded by the end of this month.
Total cost of constructionof Karuma dam and power plant is estimated to cost approximately US$ 1.7 billion. That figure includes the cost needed to build a transmission line from Karuma to a location where the power will be integrated into the national power grid.
Last year, Finance Minister Maria Kiwanuka said 85% of the funding will come from the Exim Bank of China while Uganda government will provide 15% of the funding adding that the concession loan from China will be repaid in the next five years.
The project currently being undertaken by Sino Hydro Corp Ltd from China is expected to provide much needed relief to fast growing economy whose energy needs are outstripping production.
Sinohydro Corporation Chief Representative Mr. Deng Xiaoguan said in a recent report that construction of the dam is in full force and the release of the necessary funding will go a long way to enhance progress.