Rwanda’s sole peat energy company plans to raise capital in the coming months to increase its production capacity.

Peat Energy Company Ltd (PEC) managers said the firm is looking for investors to raise capital to meet growing demand.

The company produces about 13,000 tonnes of wet peat, which is below installed capacity of 20,000 tonnes due to limited market.

But last week, the company received a major boost after it signed a Rwf9 billion ( $13.2 million) contract for a five-year supply of the solid fuel to Cimerwa cement factory.

Cimerwa was recently acquired by Pretoria Portland Cement, one of the leading cement companies in South Africa and plans to increase production.

READ: Cimerwa turns to peat energy to lower costs

Cimerwa has a production capacity of 100,000 tonnes of cement per year although current cement demand in Rwanda is 350,000 tonnes per year.

“With this new deal we will be able to maximise our capacity. It will also enable us to raise money on the financial market because sometimes banks ask for long-term contracts,” Pierre Kalinganire, the chief executive officer of PEC said on Thursday.

Mr Kalinganire said the South African investment firm, African Alliance, has been hired to carry out valuation of the company.

“We are interested in getting new investors as the company expands. The value of the company should be on the market by April or May.”

“Our initial investment in peat production was Rwf2 billion ($2.89 million) in 2007 and 2008,” said Mr Kalinganire.

Peat Energy Company is owned by Rwanda Investment Group, an investment firm owned by a group of Rwandan businessmen. The investment firm also has shares in Cimerwa.

The company is also negotiating a long-term contract to supply peat energy to the Energy Water and Sanitation Authority (EWSA), which controls the generation and distribution of electricity in the country.

EWSA has commenced construction of a $36 million plant in Gishoma, which will be powered by peat.

The plant, which will add 15MW to the power grid, is expected to be operational in June this year.

The company is also exploring ways of adopting new technology to allow it to extend its mining to the wet seasons. Currently its mining activities are restricted to the dry season — between June and September.

The peat reserve in Rwanda is estimated to be 155 million cubic metres.

Rwanda is also exploring other energy sources to narrow the widening energy deficit, which is putting pressure on its economy. Rwanda generates 110MW of energy and imports 14.5MW.

READ: EWSA struggles to supply electricity

Investors in Rwanda have had to contend with high cost of energy estimated at $0.22 KWh compared with $0.08 to $0.10 in the rest of the region, according to World Bank figures.

The high energy cost is attributed to the country’s dependence on expensive thermal resources, in particular diesel and heavy fuel oils, which account for approximately 40 per cent of the country’s 110MW installed energy capacity. Hydropower accounts for 59 per cent and methane gas at 1 per cent.

Rwanda’s demand for power during peak hours is estimated to be 92MW during, the second lowest in East Africa after Burundi at 49MW, while Kenya’s is the highest at 1,194MW, followed by Tanzania at 895MW and Uganda at 445MW.

Economists say encouraging private investments and expanding energy sources outside hydropower will see more households connected to the national grid to ease power costs for households and businesses.

Rwanda exclusively depends on imported refined petroleum products to meet local demand.

Oil imports now account for above five per cent of GDP, up from less than two per cent in 1998.

The African Development Bank (AfDB) states that 40 per cent of Rwanda’s hard currency earnings go to petroleum imports.

Analysts say for the government to achieve its ambitious target of 563MW installed capacity and 70 per cent electricity access by 2017 — from the current 110MW and 17 per cent — Rwanda will also have to explore cost-effective means of developing energy resources and tapping into regional energy trade opportunities as a transition strategy from the current generation portfolio.