The first major hydpower project in Uganda was Owen Falls (nor called Nalubaale) power station on the west bank of the River Nile at Jinja. It was commissioned in 1954 and had ten 15 MW sets.

In January 1994 President Yoweri Museveni inaugurated work on a 200 MW station on the east bank of the Nile 5 km downstream of the Nalubaale dam. The station at Kiira was completed 10 years later.

In the late 1990’s consideration was being given to constructing another hydro station at Bujagali 9 km downstream of Kiira on a stretch of river associated with rapids,   with a head of 23 metres, and in 2001 Uganda entered into an agreement with an American company AES for the latter to undertake the project as a private sector initiative. However in 2003, while still planning the project, AES went insolvent in the aftermath of the Enron scandal in the US.

It was only in 2006 the Bujagali project resumed and after a submission of tenders, Bujagali Energy Limited was formed. This is a consortium comprising the American company Sithe Global and Kenyan Industrial Promotion Services. The consortium provided some US$190 million of the required US$860 million funding into with the remainder sourced in the form of loans from the World Bank, the European Investment Bank and the African Development Bank. The hydroelectric scheme accounts for US$800 million of that funding, with another US$60mmillion being used to build a 100 km long transmission line associated with the project.

In July 2008 the chosen contractor, Italian company Salini, started construction of Bujagali on a limited basis while the remaining funds for the project were being sourced. The government decided to avoid further delays if all the funding could not be obtained, it would chip in and make up the shortfall. At the end of 2008 with funding in place Bujagali Energy Limited gave full notice to proceed with the project.

The first five 50 MW units are due to be commissioned in October 2011. The final unit is due for commissioning in April 2012. When Bujagali comes on line it will allow Uganda to make up a 160 MW shortfall in supply and also enable it to retire some 100 MW of expensive generation   in the form of 50 MW of Aggreko gensetsin Uganda which use fuel oil.   

The next hydro project in Uganda is likely to be the 650 MW Karuma project   which has a commission target date of 2017 estimated to cost some US$2.2 billion.