The Emerging Africa Infrastructure Fund (EAIF) has participated in the financing of a project to develop and construct a 5.4MW run-of-the-river hydropower project in Uganda.

FMO, the Dutch development bank, has acted as mandated lead arranger of the $10.2m senior loan facility, of which 50% was syndicated to the EAIF, a direct investment vehicle of the Private Infrastructure Development Group.

The project will be developed and owned by Lubilia Kawembe Hydro, a Ugandan entity.

Lubilia is majority owned by DI Frontier Market Energy & Carbon Fund, a Danish private equity fund that is developing a portfolio of renewable energy independent power producers in Eastern Africa.

Emilio Cattaneo, Executive Director, Emerging Africa Infrastructure Fund, said: “Sustainable energy projects are now at the core of EAIF's portfolio and we were delighted to work with FMO on the Lubilia Kawembe Hydro project.”

“It is one of four hydro facilities we are helping to facilitate in Uganda and which are at different stages of development. We also have two solar farm projects in the country,” he told Africa Global Funds.

Cattaneo said that “EAIF currently has a strong new business pipeline in sustainable energy”.

“Alongside the traditionally understood economic development benefits of new energy capacity, such as power for industry and homes, is the unlocking of the digital world. EAIF is a leading lender in power and telecommunications and we anticipate a growing flow of good quality projects in both sectors,” he said.

Lubilia Kawembe Hydro project will be located at the foot of the Rwenzori Mountains in Western Uganda.

It will serve the equivalent of 256,000 people via generation and has an annual avoided GHG rate of 11,000 tCO2eq.

Uganda has one of the lowest electricity consumption per capita in the world, with an average electrification rate of 15%.

The country’s power sector suffered from a shortage of generating capacity and a lack of reliable and affordable electricity is hindering a more sustainable economic growth.

FMO said that this small run-of-the-river hydro power project is the second project out of a larger mandate with Frontier to arrange approximately $56m financing for four small hydro’s in Uganda, totaling 31.9MW (~140GWh).

“The first project, Siti 1, achieved financial close on October 28, 2015. FMO financed this project together with EAIF. We are currently in due diligence phase for the Siti 2 (16MW) project,” FMO said.

The project is developed under the KfW led GET FiT facility, which is a dedicated support scheme for renewable energy projects managed by Germany’s KfW Development Bank in partnership with the Government of Uganda through the Electricity Regulatory Agency (ERA).

The project is funded by the European Union Infrastructure Trust Fund, and is also supported by the Governments of Norway, Germany and the UK.