The main entrance to Sugar Corporation of Uganda Limited in Lugazi Municipality.

Sugar Corporation of Uganda Limited (SCOUL), the third largest sugar plant in Uganda, recently received €40 million (about Shs177.3 billion) from France’s Proparco to finance a new 26MW co-generation power plant.

According to the financial arrangement, Proparco granted a €20m (about Shs88.7 billion) loan band catalyzed funds from the Dutch Development bank, FMO, which contributed a similar amount to the project.

The new power plant, FMO said, “will allow the company to produce green electricity at a competitive price to meet its own needs and to be sold to the national grid.”

The generation of the electricity will be done by burning bagasse, a residue of sugarcane. This is the second time Proparco has made an investment in SCOUL after an initial US $23 million (about Shs85.10 billion) loan it granted the sugar firm in 2012.

That Loan “allowed the sugar company to increase its production capacity and expand its technical assistance to Smallholder farmers.”

Electricity generation from the use of bagasse has become popular, attracting a number of factories into the industry, which has in turn shrunk the margins of the older firms from the sale of sugar.