Chinese firm set to develop a 500-megawatt solar plant in Uganda

UGANDA – China Energy Engineering Group Company has announced its intent to develop a 500-megawatt (MW) dam and has contracted China Gezhouba Group International Engineering Company as its engineering, procurement and construction contractor.

A framework contract, according to online sources, is an agreement between one or more businesses or organisations with the aim of establishing terms governing contracts.

According to the Chinese company, the 500 MW project will be constructed in two phases at an estimate of US$500m (USh1.8trillion).

Gezhouba International Company will be required to design, procure, construct and perform trials for the 500 MW photovoltaic power generation project.

The specific scope of work, contract amount and time limit of performance of the project, the announcement reads, will be determined in the subsequent formal commercial contract agreement.

The framework contract term is expected to last three years.

This comes just days after ERA revealed that another Chinese firm has applied to build a US$1.4b Ayago Hydro Power Plant on River Nile.

This is the case despite Uganda’s power surplus with a generation capacity of about 1,250 MW but only 670 MW peak demand.

Mr Barry Dyson, power sector lead at Cities and Infrastructure for Growth, said despite the power surplus, Uganda needs diversification, so solar power is relevant, especially if it is in areas that are not connected to the grid.

“Uganda needs diversification, if customers to take the power are around to make the economics viable. The decider is the price of power at the fence as well as the cost of capital,” he noted.

However, according to Ms Diana Nabiruma, Africa Institute for Energy Governance senior communications officer, Ugandans are saddled with solar power projects that have not benefited the end user.

According to Daily Monitor, Uganda is struggling to lower tariffs amid growing power surplus generated by expensive dams which strain the country with capacity payments.

The average rate of return for renewable projects is 12 to 20 per cent. Data from ERA indicates that Uganda has four grid-connected solar photovoltaic plants with capacity of 50 MW.

These include, 10 megawatt peak (MWp) Bufulubi Power Plant, 10 MWp Tororo Solar North Plant in Tororo District, and the 20 MWp Kabulasoke Solar Plant in Gomba District.

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