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Who is our client

Nyamagasani 2 HPP Ltd is a special purpose vehicle incorporated in Uganda to develop, construct and operate a 6MW run-of-river hydro power plant. The project is developed in parallel to the adjacent upstream 15MW Nyamaghasani 1 project. Nyamagasani 2 HPP Ltd is in majority owned by a private equity fund managed by Frontier Investment Management Company from Denmark.

Funding objective

The funding is targeted towards the development and construction of the 6MW Nyamagasani 2 run-of-the-river hydro plant. FMO is the lead arranger for the approximately USD 15.5 mln senior debt tranche. FMO intends to provide USD 10 mln itself, and catalyze USD 5.5 mln from another party.

Why we fund this project

The transaction is expected to have a high development impact. It will support the economic development of Uganda and the region. The project is expected to generate 28 GWh clean energy per year, serving the equivalent of 71,165 people and has an annual avoided GHG rate of 14,784 tCO2eq. Uganda is a rapidly growing economy, but suffered from historic underinvestment in the power sector. In Uganda this is among others being addressed by the capacity addition targeted under the GET FiT program. FMO is additional in this transaction by providing debt with a 15y tenor, which is not available on the market in East Africa.

Environmental and social rationale

This transaction has been categorized as Category A, in line with FMO environmental and social risk categorization and mainly due to some resettlement. The main environmental and social risks surrounding the project are normal risks related to the construction activities and respective practices including spoil management, local recruitment of labor, biodiversity protection and resettlement. The major impacts are generated through the Construction Phase (24 months). For this, adequate mitigation plans have been developed. During the Operational Phase, impacts are negligible. FMO feels comfortable with the adequacy of the mitigation measures and the experience of the developer in their successful implementation. The following Performance Standards (“PS”) are triggered by the transaction: PS1: Assessment and Management of Environmental and Social Risks and Impacts PS2: Labor and Working Conditions PS3: Resource Efficiency and Pollution Prevention PS4: Community Health, Safety and Security PS5: Land Acquisition and Involuntary Resettlement PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources PS 8: Cultural Heritage PS 7 is not triggered because no impacts on local groups qualifying as Indigenous were identified.

Signing date
Total FMO financing
USD 13.44 MLN
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)