Chinese to Invest 1 Billion Dollar in Energy Sector
China-African Investment and Development Co. Ltd (CAIDC), a Chinese investment conglomerate, are to invest one billion US Dollars (US$ 1bn) in Energy Sector in Uganda, highly placed source in the ministry of energy and mineral development has revealed.
China African Investment and Development Corporation was co-founded by China Poly Group and China Development Bank, as a special purpose vehicle for infrastructure development investment in Africa.
“CAIDC specializes in not only in Power Infrastructure Sectors and devoting into improving and promoting the basic development in Africa but also invest in Commercial Farming, Real Estate Development, Promote Culture Business and Investment business among others” Mr. Tom Ma its Project Manager Investment said.
CAIDC signed a Memorandum of Understanding with the Uganda Government in the year 2015 after which a pre- feasibility study was carried out and Electricity Regulatory Agency (ERA) approved it to construct a 330 mega watts at KIBO under Build Operate and own arrangement.
According to information available, Electricity Regulatory Agency (ERA) and in accordance with Electricity Cap 145 of 1999, the formal feasibility study phase is supposed to commence subject to the formal award of a permit from ERA whose Board has already approved.
Chinese – Africa Development Fund (CADF) was inaugurated in June 2007 with an aim to encourage and support Chinese Investment in Africa with a total capital base of US$ 10billion.
“We provide capital financing and investment in Africa, provide values addition investment and link African Projects with Chinese Companies and sensitize them on principles of fund utilization among other things the CAIDC local representative told this reporter.
Recently Uganda, like other East African Countries of East Africa, Tanzania and Kenya reached a GDP to Debt ceiling of 50% borrowing to build and construct power dams hence resorting to build operate and own system.
A senior Energy Ministry official on condition of anonymity explained to this reporter that due to Gross Domestic product (GDP) ratio to debt constraints on borrowing capacity in Uganda and the East African region, Hydro electric power projects like Ayago Dam cannot be financed under Engineering procurement and construction financing terms (EPC) like was done with the Isimba Dam (over 180 mega watts) and the Karuma HPP
The official also intimated that with every 1% increase in GDP, meant there must be a correspondent 2.5 % increase in effective demand for electricity in order to maintain GDP growth figure and therefore generation capacity needed to increase despite the regions diminished capacity to borrow giving the increased need for private sector investments in electricity generation.
