Investor asks for more time to get money for power project

Tuesday March 1 2016


Kampala- The Electricity Regulatory Authority (ERA) has amended Mss Xsabo Power Limited’s licence.
Xsabo is a company that wants to generate 40 Megawatts of power from wind and solar.

The amendment is meant to give Xsabo more time to post performance bonds, reach financial close, and commence construction of two power parks.

Xsabo now has 182 days, up from 45 days, from September 15 within which to post performance bonds.

For each Megawatt, Xsabo should post a bond of $20,000 (Shs66.960 million) before the commencement of construction. And it will have to reach financial close (conclusion of project and financing agreements) within 270 days, up from 107 days.

According to some estimates, the two power plants, one in Gomba District and the other in Tororo District, will cost $64 million (Shs214.272 billion). Two–thirds of this will be borrowed.

ERA’s chief executive officer Dr Benon Mutambi, however, warned through a February 2, notice: “This licence shall automatically lapse upon failure by the licensee to submit the above bond within 182 days from the effective date.”

When contacted, Xsabo’s CEO David Alobo told the Daily Monitor that Xsabo would commence construction of the solar power park in Gomba in August.

Via electronic mail, he told Daily Monitor: “There are internal deadlines that banks need to carry out final due diligence on approved project[s] loans. The time frame for this formality had become too short as the licenses were issued later than we had anticipated. So the project timelines had to be adjusted, thus the need for license modification,” Dr Alobo said.

He added that Xsabo would pay $600, 000 (Shs2.008 billion) as performance bond to guarantee the start of the construction of the power parks.

Construction will start on August 16 and the tentative commissioning date is December 16.