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Uganda: West Nile Electrification Project
(Prototype Carbon Fund)

UNFCCC Reference No.: 0775

3 Project Documents

Wedged between the Congo, the south of Sudan and the West Nile river, the 1.5 million people in Uganda’s West Nile region live in relative isolation from the rest of the country. Road connections are few, and driving conditions difficult. Nowhere in Uganda is oil and gasoline more expensive than in the West Nile. The national power grid does not reach into the northwest of Uganda, and power from generators is available only for a lucky few and only for a few hours a day.

Some entrepreneurs have started mills and small workshops, outfitting them with old diesel generators that are very expensive to operate. Some institutions such as the hospital and some of the richer households have their own diesel generators that help them escape the scarce and unreliable public power service. The growth in individual generators is indicative of a general upswing in economic activity in the region. But life without good roads, reliable electric power, and, until recently, public telephones, remains a challenge.

This will all change when, in a few months, the first new power will flow to customers, produced by a private company that won the concession to generate and distribute power in the West Nile. The PCF has been instrumental in making this possible. In early 2004, the West Nile Rural Electrification Company Ltd. plans to start up their new efficient diesel generators in the West Nile towns of Arua and Nebbi, to provide reliable power to the population during the day and most of the night. This is the first carbon finance project that has been approved in Uganda, with an Emission Reductions Purchase Agreement signed in March 2003. The company must expand their customer base quickly, because not only their income from power sales to the local population and industry, but also the PCF payments for emission reductions will depend on the speed and performance with which they manage the conversion. PCF payments also promote the construction and operation of the two new small runof- river hydropower plants of 5.1 and 1.5 megawatts. Hydropower will significantly increase the emission savings and therefore the income to the company from selling the emission reductions to the PCF. Reliable power will soon be available for workshops and hospital, for schools and households, and it will release the development potential that is buried in the West Nile’s soils and people.

An important innovation with which the Clean Development Mechanism assists host countries in achieving sustainable development is its long-term approach to development. The emission reductions from CDM projects will have to be verified by an independent “operational entity” for as long as 21 years. The PCF contract with the West Nile company runs through 2017. Thus, a regular review and veri- fication of the project’s technical, commercial and emission-reduction performance is critical for a successful commercial relationship with any carbon buyers.

The PCF has also included in the verification process a review of the project’s long-term social and environmental performance. Thus, there is a good chance that, by the end of the project's crediting period, the region will have made enough economic progress, and built enough local capacity, to ensure that the people of the West Nile are assured a long-term reliable power source, with all the inherent economic benefits that would follow.

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