The cost of energy in Rwanda is expected to slightly reduce after the World Bank injected $340 million (Rwf219 billion) for the Regional Rusumo Falls Hydroelectric Project.
Energy tariffs in Rwanda are among the highest in the region, at $23 cents (Rwf150) per kilowatt, attributable to high demand that outstrips supply.
Construction of the project, which will serve Rwanda, Burundi and Tanzania, is expected to begin once the World Bank releases the funds. It will benefit more than 60 million people.
With more electricity on the national grid, the industrial, manufacturing and general private sector will expand their output, which is constrained by insufficient power.
“Electricity is every expensive in Rwanda compared with other countries in the region, and this is working against the development of major sectors,” said Hannington Namara, the Chief Executive Officer of Rwanda Private Sector Federation.
The World Bank project is timely given the low supply of energy among the beneficiary countries. Only four per cent of the population in Burundi has access to electricity while Rwanda and Tanzania are at 13 and 15 per cent, respectively.
Due to shortage of electricity, Rwanda is resorting to power rationing for both residential and industrial users amid increasing tariffs.
The energy body charges manufacturers Rwf105 per kilowatt between 7am and 5pm, Rwf135 from 5pm to midnight and Rwf88 from midnight to 7am.
Unreliability of power
The electricity charges for industries exclude the mandatory value added tax (VAT), which is 18 per cent of the initial price.
Mr Namara put Rwanda’s energy requirements at at least 1,000 megawatts by 2017 to deal with the unreliability of power and have the industrial sector operating close to full capacity while the government targets to have connected 70 per cent of the population at half the current price.
According to the utility firm Energy, Water and Sanitation Authority (EWSA), tariffs for both industrial and residential consumption are high. Domestic consumers pay Rwf134 per KW per hour, also considered as among the highest in the region.
The overall Rusumo project, expected to generate 80 MW, will cost $468.60 million (Rwf302 billion).
The World Bank says the project will boost reliable power supply to the electricity grids of the three East African Community member states, reduce electricity costs, promote renewable power, spur job-led economic development and pave the way for more dynamic regional co-operation, peace and stability among the countries of the Nile Equatorial Lakes (NEL) sub-region.
The World Bank is financing the project to the tune of $340 million (Rwf219 billion) while $113.30 million (Rwf72 billion) to each of the governments of Burundi, Rwanda and Tanzania comes from the International Development Association (IDA), the World Bank’s fund for the poorest countries.
“This landmark project will have transformational impact, bringing lower-cost energy to homes, businesses and clinics in Burundi, Rwanda and Tanzania,” said Colin Bruce, the director, Strategy, Operations and Regional Integration at the World Bank.
He added that by connecting grids, people and environmentally sensitive solutions, it will help to catalyse growth and to encourage peace and stability in the sub-region.