KfW says it anticipates problems because Uganda has difficulties in attracting private sector investors for large-scale durable investments. 

The proposed site for Karuma, which is downstream of Lake Kyoga, is the only remaining spot on which Uganda can build a dam along the Nile.

The Ministry of Finance has been putting aside $70 million annually since 2007 and now has some $350 million to finance the initial phases of the project.

The cost of the dam is not definite at this point, though, and could rise past the initial estimate of $2.2 billion, depending on what the geology throws up.

According to Henry Bidasala, assistant commissioner at the Ministry of Energy, Uganda has contracted the India-based firm Energy Infratech as project consultants to conduct feasibility studies and act as project supervisors. The government is also recruiting a project manager. The position has already been advertised. 

Chinese equipment worry

The donors also caution that the four Chinese contractors bidding for the construction contract may not be up to the job.

While acknowledging that there are many experienced and qualified Chinese contractors who have successfully delivered projects in Africa, they say there are exceptions: Electrical and electro-mechanical equipment from China tends to be of lower quality than equipment manufactured in Europe or the United States.

“The electrical and electro-mechanical equipment has a big impact on the efficiency, durability and operation and maintenance costs of hydropower plants,” said Dr Witte.

However, Mr Bukenya said this was not an issue. “We are not even sure that the Chinese will win the bid, but if they do I am sure they will do their best to demonstrate their competencies.