Emerging Africa Infrastructure Partners is financing 50% of a $10.2 million loan in a deal led by Dutch development bank FMO for a 5.4MW run-of-the-river hydro power project owned by Lubilia Kawembe Hydro, a development company majority owned by Frontier Market Energy and Carbon Fund, a Danish private equity fund. The project, which will be located at the foot of the Rwenzori Mountains in Western Uganda, will serve the equivalent of 256,000 people once it is completed.
The project is part of a broader $56 million financing mandate being led by FMO, which will support the development of four small hydros in Uganda which are expected to generate 31.9MW once they are up and running. Uganda has one of the lowest electricity consumption rates per capita in the world, with an average electrification rate of 15%. Shortage of generating capacity and a lack of reliable and affordable electricity is hindering more sustainable economic growth.
The loan is the second of the four planned transactions for the mandate. EAIF also participated alongside FMO in the first, Siti 1, which achieved financial close in October 2015.