Dubai power provider signs $17m Uganda solar deal

The Dubai-based Access MEA will build a 10 megawatt plant in northern Uganda, taking part in one of the largest independent solar power projects in Sub-Saharan Africa.

The announcement comes after the Ugandan president Yoweri Museveni visited Abu Dhabi this week to strengthen bilateral relations, which have steadily grown over the past five years.

“There’s never been a solar project like this in Uganda,” said Rene Meyer, the secretariat of Uganda’s GET FiT programme, a renewable energy financial mechanism catering to private investment. GET FiT, which only recently added solar power to its agenda, aims to usher in 20 small scale renewable projects each year.

“It’s been months in the making. We were quite fortunate that [we] had the lowest tariffs,” said Reda El Chaar, the Access Power MEA chairman. “There’s more money chasing projects [in the region] than actual projects.”

The company, through its subsidiary Access Uganda Solar, was chosen out of seven offers to build, own and operate the solar photovoltaic (PV) facility in Soroti, 300 kilometres north-east of the capital Kampala. The US$17 million project, able to power 40,000 homes, will help to increase electrification rates to the country, where only 15 per cent of Ugandans have access to power, according to the World Bank.

It bid at a tariff of 16.38 US cents per kilowatt hour (kWh) for a duration of 20 years, which Mr El Chaar noted was one of the lowest tariff rates in solar PV on the continent. Consumers will pay 11 cents per kWh while the GET FiT scheme will cover the remaining amount.

The World Bank has said the lack of power infrastructure in Sub-Saharan Africa hinders business productivity by about 40 per cent, adding that the impact of deficient infrastructure is at least as large as that associated with corruption, crime, and financial market and bureaucratic constraints.

For power projects to get under way in the region, typically new transmission lines must be built to expand grid capacity. The relatively small scale of Access’s project means there is no additional infrastructure that needs to be built.

“In addition to being quick to implement, solar projects can be built close to demand centres, thereby reducing transmission losses and stabilising the grid,” said Benon Mutambi, the chief executive of Uganda’s electricity regulatory authority.

Mr El Chaar said that a new trend was emerging in the continent with investors paying more attention to smaller scale projects – especially solar – to bypass the lack of infrastructure.

But to mitigate risk, a definitive timeline for project completion was vital, he said. “This is really the number one risk, and the GET FiT brought us that time certainty.”

Access plans to finish the financial deal by June and commence operations by the end of 2015.

In addition to bringing power to the rural, farming community in northern Uganda, the project could create hundreds of jobs in the Soroti district.

Mr El Chaar said the project could eventually economically support 80 to 100 households.

Access has finalised deals to build 30GW of power projects globally with a specific focus on the Middle East and African markets.

The company is looking to develop a portfolio of renewable energy projects in 15 countries in Africa. The company is also looking into projects in Saudi Arabia.

Follow The National's Business section on Twitter