China International Water and Electric Corporation will build a 188MW hydroelectric plant fore Uganda

Cheap credit earns China Ugandan hydro project

Uganda has hired a Chinese firm to build a hydroelectric dam on the Nile, the second such project to go to China in recent months.

China, as elsewhere in sub-Saharan Africa, has rapidly expanded its investment in Uganda in recent years, snapping up major government contracts often after extending cheap credit.

The latest 188MW hydroelectric project, the Isimba hydropower dam, will be developed by China International Water and Electric Corporation (CWE) and China's Export-Import Bank will give Uganda another loan worth $500m (£325m), which would be on concessional terms, Junior Energy Minister Simon D'Ujanga said.

"We're looking for cheap money to develop our infrastructure projects and China has that money," he said, adding that the memorandum of understanding (MoU) had been signed and work on the dam was expected to start in August.

Last month, Uganda gave China's Sinohydro Group a contract for the east African nation's biggest power project yet, Karuma Hydropower, also on the Nile, at a cost of $1.65bn, partly financed by a $500m Chinese loan.

Early in July, a Chinese consortium won a contract to restart production at Uganda's Kilembe copper mines at the foothills of Rwenzori Mountains along the border with the Democratic Republic of Congo.

Uganda is keen to expand its power generation capacity to meet fast-growing energy needs, seeking double-digit economic growth when crude production starts.

Production is scheduled to begin in 2016 after commercial deposits were found in the west of the country. Crude reserves are estimated at 3.5 billion barrels.

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