Bujagali Energy Ltd. The project consists of the development, construction and maintenance of a run-of-the-river power plant with a capacity of up to 250 MW on a Build-Own-Operate-Transfer (BOOT) basis on the River Nile, at Dumbbell Island, 8 kilometers north of the existing Nalubaale and Kiira power plants, in Uganda.  The project company will also manage the construction of approximately 100 kilometers of 132 kV transmission line on behalf of the Uganda Electricity Transmission Company Ltd. (UETCL), Ugandas national transmission company, to strengthen the evacuation of electricity from the facility.  The project will be an Independent Power Project (IPP) and will sell electricity to UETCL under a 30-year Power Purchase Agreement (PPA), which was signed on December 13, 2005.  UETCLs payment obligations under the PPA will be guaranteed by the Government of Uganda (GOU) through a government guarantee. The project is expected to have a major economic and developmental impact on Uganda. The current energy crisis faced by Uganda has led to significant load shedding. As a result, the GoU is forced to rely on an additional 100 MW of expensive thermal power to mitigate the problem and has had to almost double tariffs in 2006. Some business users have resorted to importing backup diesel generators, but many other users cannot afford them. This is constraining economic growth, particularly in the industrial sector.  The project will:   - displace at least an estimated 50MW of expensive emergency thermal power when it is commissioned in 2011; - relieve residual load shedding; and  - meet incremental base load demand with least cost power generation.   This will prevent further rises in electricity tariffs and may allow a decrease. It will enable more residential users to be connected every year, including in rural areas. It will also allow industrial and commercial users to reduce their costs and increase their productivity, thereby boosting economic growth. Availability of cost effective electricity will also increase the attractiveness of Uganda as an investment destination.   During the construction phase of the dam, the project is expected to create 600-1,100 jobs for Ugandan nationals, some 10% of whom are to be hired from local communities. The community development action plan (CDAP) for the project includes strengthening of educational and health services and provision of clean water to affected communities. By recycling the same water that is already used to generate power at Nalubaale and Kiira, the project reduces the pressure to over-release water from Lake Victoria, thereby helping to preserve lake levels and facilitate the GOUs compliance with the Agreed Curve.  Through the displacement of thermal power that would otherwise be needed, the project reduces carbon and other pollutant emissions.  The project would be Ugandas first IPP and one of the largest mobilizations of private financing for an IPP project in Africa.   The project would strengthen Ugandas achievement of comprehensive reforms in the power sector, started in 1999 with support from the World Bank Group.  As such, it would facilitate further private sector investment in Uganda and have important demonstration effects in the region.  On the other hand, failure to implement the project would be very costly for the country, as more expensive energy sources would have to be developed, and power sector reforms may be jeopardized.