Out-Law News 3 min. read
16 Nov 2015, 3:15 pm
The AfDB said plans by the countries to encourage private sector investment in grid expansion projects and new wind, solar and geothermal power generating facilities, have been endorsed by the UN-backed Climate Investment Funds (CIF).
According to the AfDB, the investment plans (IPs) drawn up by the two East African Community nations “will also promote and support greater private sector engagement in power generation”.
Uganda’s IP, to be implemented under the CIF’s ‘programme for Scaling Up Renewable Energy in Low Income Countries’ (SREP), “will focus on geothermal development, solar photovoltaic off-grid rural electrification and grid net metering, and wind measurement for development of a pilot wind power project”, the AfDB said.
According to the AfDB, Uganda will also “promote and support greater private sector engagement in power generation from renewables, help consolidate the sector’s regulatory framework, and promote gender equality and inclusiveness”. The IP will be backed by the AfDB and other partners including the World Bank’s International Finance Corporation, which will act as a geothermal advisor and provide an “indicative” $50 million.
The AfDB said Uganda’s IP (142-page / 9.45 MB PDF) is designed “to build on the country’s policy infrastructure for sustainable energy envisioned in its Vision 2040 for Uganda, including increasing energy access to an ambitious 80% by 2040”. Off-grid and mini-grid solutions will be a key role in providing electricity for remote and isolated areas “where connectivity to the main grid is too expensive”, the AfDB said.
Ugandan IP priorities over the “coming months” include developing a ‘decentralised renewables development programme’ and plans to generate 130 megawatts (MW) of electricity using geothermal power.
The AfDB said Uganda’s IP goals foresee total investment “of at least $455m in the power sector associated with SREP”, including “a minimum direct contribution of 151 MW” of generating capacity from renewables (not including hydropower) and increasing overall annual domestic power generation by 125.4 gigawatt hours.
Commissioner James Baanabe of the Directorate of Energy Resources Development in Uganda’s energy and mineral development ministry said: “Uganda has made a commitment to this investment plan because we recognise that energy is the engine of our growth… we also need to draw on our natural resources and to engage the private sector to ensure a sustainable energy base throughout our country.”
Rwanda’s IP (103-page / 2.15 MB PDF) aims to “significantly develop much-needed off-grid electricity access” for schools, health centres and institutions, “particularly in rural areas”, the AfDB said. The IP will help Rwanda reach its target of connecting 48% of homes to the grid and offering more “sustainable off-grid solutions, including solar home systems and mini-grid connections”.
According to Uganda’s IP, total estimated funds required amount to $183.2m with a SREP contribution of $50m for off-grid renewable energy investments and technical assistance activities over a five-year programme starting 2017. The SREP financing is expected to attract nearly £3m from “other financing sources”.
Support to be developed in the coming months for Rwanda will include technical assistance “to address market barriers through market development”, such as “increasing institutional and regulatory capacity, and assisting local financial institutions in appraising renewable energy projects”, the AfDB said.
The manager of the energy division in Rwanda’s infrastructure ministry, Robert Nyavumba, said the SREP endorsement will allow the private sector “to engage in building an effective renewable energy market”.
The $8.1 billion CIF was established in 2008 as “one of the largest fast-tracked climate financing instruments in the world”. SREP helps provide developing countries with grants, concessional loans, risk mitigation instruments, and equity to attract financing from the private sector including multilateral development banks.
Last November, the World Bank said it would provide $1.2bn of funding to support infrastructure development and “improve the competitiveness” of countries throughout the East African Community. The bank said the financing would contribute to the countries’ planned investments over the next three to seven years and “is additional to large ongoing individual country programmes”.
Uganda and Rwanda were among East African nations that shared a total of $9.3bn in ‘impact-investment’ funds that flowed into the region over the past five years, according to a report published earlier this year. The ‘Landscape for impact investing in East Africa’ report, based on research funded by the UK Department for International Development’s impact programme, said Uganda received 13% of all disbursements in the region and Rwanda 4%.
