Buseruka Hydropower Project


  • Reference: P-UG-FAB-005
  • Approval date: 09/07/2008
  • Start date: 12/08/2009
  • Appraisal Date: 05/05/2008
  • Status: OngoingOnGo
  • Implementing Agency: HYDROMAX Ltd.
  • Location: UGANDA


PROJECT Description:

The Buseruka Hydropower project will build and commercially operate a 9-MW hydroelectric powerplant to support small-scale renewable energy power generation to a rural area of Uganda including commercial service delivery of energy by a private enterprise. As shown in Figure 1 below, the project site is located on the flanks of the Western Rift Valley, which is accessible from Kampala through Kiboga. The nearest town is Hoima, which is 35 km to the east. The elevation at the site is between 600 and 900 meters above sea level. The project includes the construction and installation of a small storage reservoir along the river bay, a run-of-river canal, fore bay, penstock, turbine, generators, control room, tailrace, and substation. It also involves the erection of a 46-km, 33 kV evacuation line for grid connection, as well as the extension of transmission and distribution networks to areas that are currently not served by the national utility company, Uganda Electric Transmission Company Ltd (UETCL). The project site is mountainous and uninhabited, making access challenging. Access roads will therefore need to be constructed around the project area.


Project Objectives: To provide roughly 26,000 consumers in the project area with access to least-cost and reliable electricity

Development Impact: From a broad perspective, this project will contribute to the attainment of the Millennium Development Goals in that it will help address the reversal of loss of environmental resources, will contribute to productive and decent employment, will help improve the delivery of health services, and will benefit rural primary and secondary schooling.


Despite Uganda's impressive economic growth in the recent past, the ongoing electricity crisis has strained the country's medium-term growth prospects. Substantial power shortages and outages have limited commercial and industrial productivity, with larger businesses opting for expensive diesel generators. Not surprising, manufacturing, high-value agriculture, and processing industries have seen a significant increase in their operating costs with a concurrent decline in profits. At the same time, there have been other macroeconomic consequences, including higher than projected inflation (from 2006) and a widening trade deficit (due to higher oil prices and increased diesel fuel imports). The Government has been implementing a number of reforms and measures since 1999, with a comprehensive Strategic Plan to radically transform the Ugandan power sector. However, there is still a pressing need to increase power supply to meet the burgeoning demand. Hence, the Government's identification of increased energy supply (especially in rural areas) as a priority in its 2007 Budget.

Uganda's national power demand is estimated at 380 MW, while the maximum supply capacity stands at about 251 MW, creating a gap of 129 MW. Nevertheless, Uganda's per capita electricity consumption remains one of the lowest in the world, at a mere 44 kWh. In addition, it is estimated that only between 3.5 and 6% of the population has access to electricity supply through the national grid (this figure drops to 2% in rural areas). 2.23 Deterioration of the sector is attributable to delays in adding new generation capacity, drought experienced across the region in recent years, and annual growth in demand for electricity of about 8% . Uganda is expected to lease and commission 150 MW of oil-fueled power generation as well as some generation from bagasse (a sugar cane derivative used for renewable power generation), and from small hydropower plants between 2006 and 2010 to help meet this demand. Alternative sources of power that are presently in use include wood fuel (which has the negative effect of contributing to deforestation, loss of natural habitats, air pollution, and potentially harmful emissions) and high-cost diesel generators.


Analysis of Strategic Alignment and Development Impact

Alignment with Bank Strategy:

The project aligns with the Bank's Private Sector Operations Strategy to promote the participation of private investors in the financing of infrastructure projects; it will also consolidate the Government's program to attract more investors into its energy sector. Affordable power supply with improved reliability will increase electricity access to both rural households and businesses; it will stimulate economic growth and improve living standards. Fewer blackouts will reduce the need for expensive and air-polluting backup generators. As such, the project is also in line with the Bank's recently approved Clean Energy Investment Framework and one of the first to benefit from the Carbon Credit Scheme. This project is therefore well aligned with both Ugandan and AfDB development priorities, and will directly address the respective goals laid out to increase access to least-cost power, while also stimulating economic, social, and environmental benefits.

Development Impact:

The proposed project will help UETCL avoid using thermal generation for rural electrification. The main economic benefit is the savings in capital and operating costs on the avoided thermal capacity. The Buseruka plant is a very cost-effective power producer with an averaged cost of power of about US 7

Key contacts

DUROWOJU Raubil Olaniyi - OPSD4


Finance source Amount
ADBUSD 5,471,890
Co-financierUSD 10,846,501
DeltaUSD 61
TotalUSD 16,318,452