5 April 2006 - The Ugandan government has answered the controversy surrounding its award of a 50 MW power plant contract to a Norwegian firm by highlighting that several factors other than initial plant cost were involved in the decision making process.

AS Jacobsen was awarded the contract to build the 50 MW thermal power plant at Namanve, despite registering the highest bid price, a fact that puzzled other parties interested in the project.

However, moving to clarify the situation the Electricity Regulatory Authority, the Energy Ministry of Uganda, Uganda Electricity Transmission Company and the World Bank said Jacobsen was selected because it offered the cheapest cost of operations.

As part of the deal Jacobsen will operate the plant for six years before handing it over to the Ugandan government. In its bid, it projected that this would cost $289m, in addition to the $52m for the building of the plant itself.

A communication official from the Electricity Regulatory Authority, said: "The equipment cost of the thermal plant is only 15 per cent of the entire cost. The real cost of the plant is in operation and that is why Jacobsen was considered."