Parliament gives approval for $103 rural electrification loans

Parliament on Wednesday approved two motions that allow the government to borrow $102.88 million to fund rural electrification projects.

The government will borrow $91.5 million from the World Bank and $11.32 million from the Kuwait Fund for Arab Economic Development.

The loans were passed after the house approved a report of the Committee on National Economy on the government’s request to borrow the money. The committee, among other roles, examines and makes “recommendations to the House on all loan agreements required to be authorized or approved by the House under Article 159 of the Constitution.”

The loan from the World Bank will fund a grid expansion and reinforcement project in northern Uganda the West Nile region. It will, among other objectives, “provide increased electricity transmission capacity to meet the power supply needs of Northern Uganda and the West Nile region,” and “interconnect the isolated West Nile distribution network to the main transmission grid.”

The project was approved by the World Bank on 31 May, before the lender decided to withhold new lending to Uganda. It is one of three projects the World Bank will fund in Uganda this year. The group’s loan commitments to Uganda in the current financial year add up to $105 million compared to $664 million in the previous year and $725 million in 2014.

On the other hand, the Kuwait loan will “finance the construction of the 33KV and 11KV distribution project in six districts of Kiryandongo, Kibaale, Nebbi, Bushenyi, Kasese and Rukungiri.

“This project aims to further extend the rural power line coverage by construction of a 285 km network in the six districts. The project is also aimed at facilitating the implementation of the rural electrification programme, to increase access and unlock suppressed demand.”

In the report recommending the loans, the national economy committee pointed out the “mismatch between generation, transmission and distribution” of electricity. It asked the government to address the mismatch to “ensure that the medium target of 30 percent access to electricity is attained, but also ensure that all generated power is consumed.”

Additionally, “the committee called upon the government steps up efforts to increase power supply which will gradually help to reduce energy prices to about 7 US cents/kilowatt/hr by 2017,” according to a report on the parliament website.

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