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Wednesday, 3 April 2013

Karuma Dam in Uganda may be funded by the Chinese


The proposed Karuma Dam in Uganda which is envisioned to be the biggest dam in Uganda producing upto 600MW of electricity may soon have the Chinese Government backing it as a financier.

This is following frustration by H.E. President Yoweri Museveni with his Ministry of Energy officials, due to the delay in procuring of an EPC(Engineering, Procurement & Construction) partner for the proposed hydropower dam.

Last week, 28th March, 2013 The President took control of the project and boarded a plane for the BRICS summit in Durban, South Africa, where he presented it to the Chinese President Xi JinPing as one of his priority projects.

In addition to seeking funding he also requested the Chinese delegation to seek a credible contractor after two Chinese firms that were being eyed as potential EPC partners for the project were found to be wanting in terms of the information they presented to qualify for the project. All over Africa there have been instances where Chinese companies put the Chinese government and its people in bad light by being overly greedy and unorthodox in the sourcing and implementation of projects. This is something the Chinese government has to reign in to redeem its country’s image even as it offers over USD20billion annually in unconditional loans to African countries for major infrastructural projects.

Uganda is seeking funding for the project after several key western donors withdrew their backing for the country’s budget. This necessitated the US$ 600M that was to be made available for the project to be redirected to the government's recurrent budget. As western governments and institutions back down due to economic slowdown in their economies and ethical & moral stands, the BRICS(Brazil, Russia, India, China and now South Africa) especially China are seen as an alternative to fill the gap as financiers in less strings attached financing arrangements.

Reports from the Summit suggest that Chinese government agreed to fund the project through the Exim Bank of China.