KAMPALA (Reuters) – Umeme Ltd, the Ugandan power distributor, said on Thursday it has secured $70 million in a syndicated loan to fund infrastructure upgrades and grid expansion.
The loan was agreed with the World Bank’s private lending arm IFC, South Africa’s Standard Bank and Dutch development bank FMO.
Umeme said investments will be carried out within three years and will involve revamping sections of the distribution network, increasing grid connections and boosting supply reliability.
“This financing will enable us to mobilise and deploy the much-needed long-term capital expenditure urgently needed to evacuate the new generated power,” the company said in a statement.
The Karuma Hydro Power plant, a 600 megawatt (MW) China-funded power plant on River Nile, is expected to be commissioned by next February. Another hydro power plant on the Nile also funded by Beijing, the 183MW Isimba Hydroelectric Power Station, was commissioned early this year.
Uganda’s national grid currently reaches just 26% of the nation’s 44 million people. When Karuma is operational, Uganda’s total power generation is expected to hit nearly 2000MW.
Umeme said the funding will also help it connect more of its customers to prepaid meters, a strategy it began rolling out in 2011 to help cut rampant customer defaults and power thefts.
The company is listed on the Uganda and Kenya stock exchanges. Its largest shareholder is Uganda’s state-controlled National Social Security Fund NSSF.
Other major shareholders include South African funds, such as Allan Gray, Kimberlite Frontier Africa and Investec Asset Management.
Last year, Umem said it plans to spend $1.2 billion over seven years to revamp and expand the grid, including extending lines and building new substations.
Reporting by Elias Biryabarema; editing by Mike Harrison