President Museveni has said that the high cost of electricity is not about to reduce until Uganda clears the outstanding loan from the African Development Bank (AfDB).
The President was on Monday meeting the President of the bank Mr Akinwumi Adesina at the sidelines of the 28th Ordinary African Union Summit of Heads of States and Governments in Addis Ababa, Ethiopia.
The President’s stand follow complaints by Ugandan manufacturers and other businesses about the high cost of electricity in the country, which they say makes their products uncompetitive in the region.
In 2007, the AfDB Board approved a $110 million loan finance, build and operate a 250 megawatt power plant on the River Nile near Jinja, The Bujagali Interconnection Project, was intended to link the power plant to the national electricity grid through the construction of about 100 kilometers of 220 and 132 kilovolt transmission lines.
Uganda is developing two more hydropower dams, Karuma and Isimba, on the Nile with a combined capacity of 780 MW.
AfDB President Akinwumi in his response gave full assurances to government that it would provide affordable electricity to all Ugandans.
“In this regard, the bank will float a credit guarantee facility of $500million bond. This facility will restructure tenure of the loan over a 15-year period and will bring down the electricity tariffs. The bond holders will be paid revenue that will be generated from projects (Bujagali),” he said, adding however, that there was a need for a government mandate for the bank to proceed with Bujagali.
President Museveni said he would brief Cabinet and send official communication on the matter. A cabinet paper will be prepared on how to refinance Bujagali.
President Museveni and Mr Akinwumi also discussed ways in which the bank can support Uganda’s efforts to empower youth and women. The government has already approved a budget of Shs265 billion for the first five years of implementation 2013-14 to 2017-18 in the youth livelihood fund and another $100 million to the Uganda Women Entrepreneurship Programme (UWEP).
The President said the government is injecting $100 million a year into Operation Wealth Creation aimed at transforming the informal agriculture sector into a money economy.
Mr Museveni proposed a three-pronged strategy that could be supported by the bank including patenting scientific innovations, transforming imports into manufacturing and promoting local production as well as involving the youth to create a wider Small Medium Enterprises base especially through involving youth in job creation.
Mr Akinwumi said the bank has a $8 million fund to boost Africa that can be accessed by the youth. He said the bank also provides grants and credit lines to compliment what government is doing for the youth and women.
He added that the bank can provide lines of credit to the Uganda Development Bank to widen the Small and Medium Enterprises base and also provide support for industrial projects such as industrial parks.