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The country’s power sector suffered from a shortage of generating capacity and a lack of reliable and affordable electricity is hindering a more sustainable economic growth. FMO has underwritten USD 39 million senior debt for the financing of the 16MW Rand 6MW Nyamagasani 1 and 2 run-of-the-river hydropower projects in Uganda. These new 16MW + 6MW hydropower plants are located in Western Uganda, and will generate clean, low-carbon, sustainable electricity to the equivalent of 161,722 people in the area. It has an annual avoided GHG rate of 33,597 tCO2eq.
The projects are developed and owned by respectively Rwenzori Hydro (Private) Limited and Nyamagasani 2 HPP Limited. Both projects are majority owned by funds managed by Frontier Energy, a Danish private equity fund manager that is developing a portfolio of renewable energy independent power producers in Eastern Africa. FMO acted as Mandated Lead Arranger and Underwriter of the USD 39 million facility, of which 40% is expected to be risk shared with Proparco shortly. These small run-of-the-river hydro power projects are the 4th and 5th hydro project FMO is financing with Frontier Energy in Uganda, totaling 47.5MW.
The projects are developed under the Global Energy Transfer Feed in Tariff (“GET FiT”), a dedicated support scheme for renewable energy projects managed by Germany’s KfW Development Bank in partnership with Uganda’s Electricity Regulatory Agency (ERA) and funded by the governments of Norway, Germany, the United Kingdom and the European Union. The GET FiT programme helps renewable energy sources become more affordable and therefore more accessible in Eastern Africa. GET FiT is providing a subsidy of in total EUR 11.6 million in the form of result based premium payments per kWh of delivered electricity.