Uganda invites bids for $900 mln hydropower plant

KAMPALA, (Reuters)

Uganda has invited international bids for a contract to build a hydropower plant, expected to produce up to 700 megawatts (MW) and estimated to cost about $900 million, the energy ministry said on Wednesday.

The Karuma falls hydropower project had been scheduled to come online this year but was delayed after a European contractor pulled out. "The project includes construction of a 600-700MW hydropower facility with an underground power station housing five turbines," the ministry said in an advertisement in local newspapers.

East Africa's third-largest economy has enjoyed a decade of strong growth on the back of its service, construction and retail sectors, bolstered by stable economic policies. But insufficient and expensive power has long stymied expansion of its manufacturing sector.

The plant will be built on the River Nile starting in 2011, the ministry said. "Ordinarily one megawatt should cost $1 million, but of course there are other little costs that come in. So for the Karuma dam, which will be about 700MW, we're estimating it will cost about $900 million," Energy Minister Hilary Onek told Reuters.

The work involved includes planning and engineering, civil construction including supply of equipment and materials and installation of hydro-mechanical and electro-mechanical equipment among others.

The Ugandan government intends to develop the plant as a public-private partnership project. The state-run Electricity Regulatory Authority (ERA) says Uganda's electricity supply will grow by 8.6 percent in 2010 on the back of expanding hydropower generation and a steady inflow of investment capital.

Another 33 MW are forecast to be injected to the grid this year, pushing the national electricity peak output to 413 MW from 380.3 MW in 2009.