CHINA has agreed to construct the Ayago-Nile hydro-power dam that will provide about 530MW to meet the 8% annual electricity demand.

The river that drops about 80m over about 9.5km is at Murchison Falls in Nebbi district.

Uganda's ambassador to China, Charles Wagidoso, said the estimated project cost according to the East African Master Plan study of 2006 is $900m (sh1.6 trillion).

"The project can be developed to over 530MW in stages depending on the demand at home and in the regional market," Wagidoso said.

"The transmission line's cost is to be met by Uganda. The transmission line to Lira will cost $48m (sh89.2b), while the line to Kampala is to cost $50m (sh93b). The rest of the line that will cost about $802m (sh1.4 trillion) is for generation," he said.

Wagidoso said a team from China would conduct a separate feasibility study in September.

"Energy ministry officials have done the feasibility study on behalf of the Ugandan government but China is also expected to send officials to determine and verify the cost of the whole project," he said.