Rwanda’s Energy Authority is to start power rationing to avert a potential energy crisis as demand for electricity peaks amid faltering supply.

As part of power rationing, the country’s Energy Water and Sanitation Authority (Ewasa) will from May 1 introduce “time of use” tariffs for industries that will force them to operate off-peak to lower their energy costs.

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Industries operating between the peak hours of 5pm and 11pm will see their energy costs increase by 33 per cent, from the current Rwf105 ($0.17) / kWh excluding VAT to Rwf140/kWh excluding VAT. Industries working off peak hours between 7am and 5pm will incur lower energy costs with a reduction of 24 per cent excluding VAT at Rwf80($0.13).

The new regime is likely to increase power supply to households if industries cut back on demand during peak hours.

Currently, household electricity consumption is estimated at 45 per cent of the total consumed within the country while industries consume approximately 30 per cent.

“If industries shift their work routines, it will help us to increase our reserve generation capacity over and above the demand for power to 15-20 per cent, which will be reserved for household customers,” Felix Gatanazi, the marketing manager at Ewasa, said last week.

He added that feasibility studies are also under way to establish how time tariffs can be adopted for household customers.
Rwanda’s electricity charges remain the highest in East Africa at Rwf105 ($0.17)/kwh on average, raising the cost of doing business in the country given the $0.008-$0.10 range in the rest of the region.

Thomas Weingarten, the managing director of Brasserie Des Mille Collins, a local brewery, said Rwanda needs to adopt a lower tariff for industries as an incentive for investment. 

“Industries need preferential tariffs because the cost of energy is high. Our fear is that the new industrial tariffs will increase electricity bills for companies that might not want to adopt new work timings,” Mr Weingarten said of the power rationing initiative.

The high energy costs are attributed to the country’s dependency on expensive thermal resources, in particular diesel and heavy fuel oils, which account for approximately 40 per cent of the country’s 100MW installed energy capacity. Hydropower accounts for 59 per cent and methane gas 1 per cent.

But unlike its neighbours — Kenya, Uganda and Tanzania were plunged into darkness last year when power shortages peaked as water levels dropped — Rwanda’s relatively low energy consumption shielded it from constant loadshedding.

For instance, as of June 30, 2011, Rwanda’s peak demand was estimated at 79MW, the second lowest in East Africa after Burundi at 49MW, while Kenya’s was the highest at 1,194MW, followed by Tanzania at 895MW and Uganda at 445MW.

According to Ewasa, increased demand has been largely driven by new buildings, factories, street lighting and the government’s rural electricity access rollout programme that aims to connect at least 300,000 households.

With peaking demand but limited supply, Mr Gatanazi argued that introducing time of use tariffs will allow shifting of the load between peak periods.

“Generating power during peak load periods is very expensive and if industries can consume less during these periods a substantial saving within electricity generation cost can be achieved. This will also lead to reduced power bills for the industrial customers and system generation stability at large,” Mr Gatanazi said.

Due to its current huge energy deficit, Rwanda’s electricity reserve margin is very low at 0.9 per cent on average, well below the international norm of 15-20 per cent.