Rwanda seeks $5b for energy projects

Saturday March 3 2012

Photo/Morgan Mbabazi  Technicians at a power station. Electricity is expensive and limited in Rwanda.

Photo/Morgan Mbabazi Technicians at a power station. Electricity is expensive and limited in Rwanda.  

By BERNA NAMATA The EastAfrican

Rwanda is seeking at least $5 billion to fund energy projects for the next seven years as it moves to cut back on its current energy deficit.

This includes hydropower, geothermal, methane gas and peat projects as the government targets to have at least 1,000MW on-stream by 2017.

“We want more committed investors with ready funds. We want more private investment because the government alone, cannot finance these projects,” Energy, Water and Sanitation Authority’s deputy director in charge of energy Yussuf Uwamahoro told The EastAfrican at the investor energy forum held in Kigali last week.

Currently, the country has an estimated potential of 83MW to be exploited.

Its installed capacity (off/on grid) is currently estimated at 100MW with only 11 per cent of Rwanda’s estimated 11 million population connected to the grid.

Expensive and limited energy — electricity costs $0.22 per kWh in Rwanda compared with $0.08-$0.10 in the rest of the region — raises the cost of doing business in the country, according to the World Bank.

Key investment opportunities include 20 mini and small hydropower projects totalling 9MW with an expected investment of $20 million-$30 million, developing medium hydropower (12MW-17MW) with an expected investment of $80 million, a regional hydropower project – Ruzizi III (145MW) — with an expected investment capital of $450 million and 90MW Rusumo falls that needs $300 million.

Of the installed generation capacity, hydropower accounts for about 59 per cent, thermal generation, primarily hired diesel and heavy oil fuel-based generation units 40 per cent and methane gas, about one per cent.

However, according to its 2011-2017 strategic plan, the government is targeting to tap local and shared energy resources to increase hydropower generation to about 333MW and develop geothermal power plants with a capacity of 310MW while methane gas power projects are expected to deliver 300MW to the national grid.

“It is extremely important that the policy and institutional environment becomes what it needs to be — the tariffs have to be at cost recovery levels to make it attractive for private investment.

“Rwanda has enormous demand for energy but it will not be possible to develop the sector without the right regulatory environment,” World Bank director for East Africa Johannes Zutt said.

Mr Zutt added that though Rwanda has improved its business environment, its energy deficit remains a major constraint to private investment.

To attract private investment the government is offering incentives including providing land for power projects, compensating private developers for land acquisition and reforming its regulatory framework.

According to EWASA, domestic demand is expected to account for 60 per cent of peak demand; cross border mining projects are expected to account for 20 per cent while sub-regional electricity markets for the remaining 20 per cent.

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