Umeme is borrowing $50 million from several lenders to upgrade and expand its medium voltage transmission lines and substations, and to fund the installation of more prepaid meters across the country.
The details of the loan were published on the website of the International Finance Corporation, the World Bank’s private sector arm, which is providing $25 million of the loan amount.
The loan is an extension to a $170 million facility secured in 2013 from the IFC, Stanbic Bank Uganda, and Standard Chartered Bank. The power distributor said it had drawn $25 million – the last tranche of the facility – in the first half of 2016.
The extension is “an additional commitment from the lenders of the initial facility,” the IFC statement said. ” Of this amount, IFC expects to contribute an A-Loan of up to $25 Million, while the remainder of the financing is to be provided in parallel by various other banks.”
Stanbic Bank, one of the lenders on the first facility, recently secured a $55 million loan from Dubai for lending in Uganda. The bank said it would use the money to lend to several sectors, including the energy sector.
Additionally, the parent companies of Stanbic Bank and Standard Chartered signed deals at the recently concluded USA-Africa Business Forum held in New York that will see them investing in power generation and distribution projects across Africa.
Standard Bank of South Africa (SBSA) contributed $33 million to a 12-year $300 million fund. The U.S. government’s development finance institution, the Overseas Private Investment Corporation (OPIC), and Wells Fargo Bank are providing the rest of the funding. On the other hand, Standard Chartered Bank and the PTA Bank are providing a $50 million loan facility that will fund power projects in Eastern and Southern Africa, including in Uganda.
Umeme’s project will, according to the IFC statement, further support “increased access to electricity through network expansion and connection of additional customers to the grid; reduction of technical and commercial distribution losses, leading to a decrease in overall distribution costs,” and lead to an “improvement in the overall quality of services to end users.”
The IFC has a 2.8% shareholding in Umeme, and participated in the company’s initial public offering in 2012.