The World Bank Board of Directors approved today a US$120 million credit to improve the reliability of, and increase the access to, electricity supply in the southwest region of Uganda.

The five-year project will benefit residential, public, commercial and industrial electricity customers who are currently served by the existing transmission line to but who have been experiencing frequent and prolonged service interruptions owing to the poor condition of the line. It will also benefit new customers in the southwestern region of Uganda, including those in peri-urban areas along the transmission line route.

Electric power connection

Within a year of completion of the transmission line, it is expected that new consumers in the southwestern region will be connected. This will benefit about 6500 people, of whom more than 50% would be women.  Thereafter, in view of the higher capacity of the transmission system, new connections will be made in the subsequent years that will benefit additional customers every year.  This will result in increased economic activity, development and growth.

“In addition, among the key beneficiaries of the new project will be over 50,000 people living in the peri-urban areas along the transmission line route, including those who could not get connected because of high connection costs and those who will be displaced because of the transmission line construction and provided with alternate living accommodation. Availability of electricity will increase opportunities for greater economic activity and improve the quality of lives of these people,” said Somin Mukherji, Task Team Leader for the operation.

By 2020, approximately 59,000 new consumers will gain access. This will benefit more than 460,000 persons of whom more than 234,000 would be female. By 2025, the beneficiaries are expected to increase to 84,000 new consumers, which translates to about 655,000 people.

Divided into three components, the project involves:

• Construction of 137 km of the 220 kV Kawanda-Masaka transmission line and related substation construction/upgrades and resettlement of displaced persons;
• Technical Assistance in support of project implementation, transmission system development and capacity building of Uganda Electricity Transmission Company Limited; and
• Community Support projects in areas affected by construction of the transmission line, and capacity building at Ministry of Energy and Mineral Development

The World Bank has invested heavily in the power sector in Uganda with investments currently standing at US$319 million spread over four projects.

The new loan is in line with Uganda’s National Development Plan (NDP), covering the period 2010/11 – 2014/15. It focuses on increasing access to, and consumption of, electricity by investing in low cost power generation, promotion of renewable energy and energy efficiency in addition to the associated transmission and distribution infrastructure. The loan is provided on standard International Development Association (IDA) terms, with a commitment fee of 0.5 percent, a service charge of 0.75 percent over a 40 year period of maturity, which includes a 10-year grace period.

As of end June 2011, the Uganda portfolio comprises 22 IDA-financed operations and an IDA guarantee for the Private Power Generation (Bujagali) Project, with a total commitment amount of US$2 billion. About one quarter of annual IDA assistance is provided in the form of direct budget support. In addition, there are five regional projects.