A power purchase and concession agreement was signed Wednesday between the Government, through the Ministry of Infrastructure and a Turkish firm called HAKAN, to design, build, finance, own and operate an 80-megawatt peat power plant in Rwanda.

The $400m (approx. Rwf300bn) investment project will produce electricity from peat extracted from south Akanyaru peat prospects in Gisagara District.

The construction period is 47 months from groundbreaking to the period when power is expected to go on line, at the end of March 2020.

According to the Minister of Infrastructure, James Musoni, the Government has for years struggled with another peat power project expected to provide 15MW in Gishoma in Rusizi District which did not deliver on time due to poor feasibility studies.

He however gave assurances on the new project, saying extensive studies on its feasibility have been conducted since 2011.

In December 2011, the Government and HAKAN Mining and Electricity Generation Industry and Trade Inc. signed an exploration deal to kick-start feasibility studies on peat prospects in Gisagara.

"Gishoma Peat project failed to deliver on time due to lack of better studies but it will by August this year be producing 15MW. Then we hope the new project with 80MW will deliver on effectively on time. In our agreement we signed that if they fail to produce that energy by 2020 in March, they will be penalized,” he said.

The Government has no share in the project but will only purchase the power once production starts, according to Musoni.

He said studies indicated enough and quality peat at the new site and Government would ensure the construction works are facilitated in terms of basic infrastructure like roads and electricity.

The purchase agreement was signed between Ahmet Karasoy, the Chairman of HAKAN, and the State Minister for Energy and Water, Germaine Kamayirese.

Other signatories on the Rwandan side were the Managing Director of Energy Utility Company Limited (EUCL), Jean-Claude Kalisa, and the Chief Financial Officer of Rwanda Development Board Marc Nkurunziza.

Musoni said: "We have an energy deficit…our target is to get over two times the capacity we have today. The 80 megawatts are a significant contribution to our energy sector from appreciated efforts by HAKAN. Such private initiatives and investments in the construction, development and maintenance of sustainable electricity generating plants provide great economic value.”

Rwanda has installed electricity capacity of 185MW.

Employment opportunities

On his part, Karasoy said they were attracted to the country by the good investment environment which he attributed to good public administration.

He said the project will provide over 700 jobs to Rwandans beginning from Gisagara while they will also invest in corporate social responsibility projects to support agriculture especially through irrigation technology.

The signing of the agreement is part of the efforts to increase levels of energy production by encouraging private sector to own and operate power plants.

Over a dozen small hydro-electricity plants, which were set up by Government have so far been handed to private investors to operate in a bid to boost efficiency as a means to achieve the country’s energy needs.

The energy targets include connecting at least 70 per cent of the households in the country and, out of these, at least 48 per cent will draw their electricity from the national grid while the remaining 22 per cent will be connected through off-grid solutions like solar systems.

Rwanda targets 563 megawatts power production by 2018 and seeks to realize this target through both public private partnership (PPP) and Build Transfer and Operate (BOT) models.

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