Jubilee signs deal to operate Uganda hydro-power plant

Insurance and financial services group Jubilee Holdings has won a joint 30-year concession deal to operate Uganda’s Bujagali hydro-electric power project, helping to diversify its revenue streams with the potentially lucrative contract.

The company, which owns Jubilee Insurance, is a joint shareholder in the 250-megawatt Bujagali Energy Limited through its subsidiary Jubilee Investment Company.

The Ugandan government, US-based hedge fund Blackstone and the Aga Khan Fund for Economic Development are the other shareholders of the project that was commissioned in October 2012.

“We will earn a share of the profits generated by the project during the period of the concession,” Jubilee board chairman Nazir Juma told the Business Daily in a telephone interview from Mauritius.

Jubilee’s investment activities earned it Sh3.6 billion in the year ended December, representing a 17 per cent increase compared to Sh3.1 billion the year before.

This helped raise its net profit 10 per cent to Sh2.5 billion from Sh2.2 billion in the same period. The firm’s share price has gained 13 per cent over the past six months to trade at Sh333 at the Nairobi Securities Exchange (NSE).

Jubilee Holdings is primarily listed on the NSE and also cross-listed on the Uganda and Dar es Salaam bourses. Mr Juma said the build-operate-transfer Bujagali concession started running in October last year.

Jubilee’s effective equity interest in the Bujagali project is not disclosed.

Building of the Bujagali plant lasted five years, with the partners contributing to the construction cost of $900 million (Sh78.3 billion).

The project, which more than doubled Uganda’s energy output, will see Bujagali sell electricity to the country’s power distributor under a power purchase agreement negotiated with the Ugandan government.

The Bujagali venture is part of Jubilee’s strategy of diversifying away from bonds and quoted equity investments. The firm has also invested in Tsavo Power, a private electricity producer in Kenya.

Jubilee also has interests in property development and fund management besides holding a stake in fibre optics infrastructure firm Seacom.

Besides increased investments in private ventures, Jubilee is also seeking to expand its insurance operations across the continent.

READ: Jubilee hires former AIG executive to drive expansion bid

Mr Juma told the Business Daily in an earlier interview that Jubilee is targeting to enter at least four new markets in the medium term. It currently operates in five countries through insurance subsidiaries in Kenya, Uganda, Tanzania, Burundi, and Mauritius.

Some of the targeted countries include Rwanda, South Sudan, Zambia, Ghana, and Senegal, Ivory Coast, and the Democratic Republic of Congo.

The company has indicated that it could use acquisitions or greenfield ventures to enter the new markets.

The regional expansion strategy mirrors the rising quest among local insurers for a larger share of the continent’s insurance business.

Britam, the parent of Britam Insurance, has also moved to expand into more African markets with its acquisition of Real Insurance.

Britam has insurance operations in South Sudan and Uganda, with its buyout of Real set to give it a presence in Tanzania, Malawi and Mozambique.

Other insurers including CIC Group that are also venturing into new markets in search of growth amid increased competition in the local market.