Private Sector Federation (PSF) is looking forward to more investment in energy generation that can satisfy consumer demand and force prices down.

Speaking at a meeting with the senatorial Standing Committee on Economic Development and Finance on the role of interconnection lines to Rwanda’s economic development, Benjamin Gasamagera, the chairperson of PSF, said there is need for increased investment in energy generation.

"Rwanda’s energy sector has enormous investment potential but we are still planning how to attract more investors in the sector to satisfy the electricity demand, especially from manufacturers, and also make energy affordable,” he said.

Rwanda’s current energy coverage stands at 40.7 per cent (208 megawatts), including 29.7 per cent on-grid electricity and 11 per cent of off-grid energy. Private sector contribution stands at 52 per cent.

‘Banks uninterested’

Gasamagera said commercial banks are reluctant to support power generation projects because they lack the expertise to determine the quality and potential of energy project proposals.

"We are trying to to work with the local banks to develop their capacity to analyse proposals from the energy sector. We also plan to approach foreign banks on big energy projects. It is something that needs to be quickly addressed,” he said.

The PSF chair said there is no reason why local banks should hesitate to invest in energy sector as long as the local manufacturing sector continues to grow and secondary cities development remain on course.

"There are many development activities that will need to use electricity. I am sure that electricity cannot fail to get market,” he said.

High cost of electricity

The latest electricity tariff, that came into force on January 1, has consumers with large industries pay Rwf83 per kilowatt, those with medium industries Rwf90 per kilowatt, while the small industries pay Rwf126 per kilowatt.

However, manufacturers argue that the costs are still high.

On the issue, Senator Celestin Sebuhoro told the media: "It seems energy generation is still problematic since manufacturers complain of power shortage, whose prices, too, seem not affordable, and this might be affecting the market. We want to bring energy body [Rwanda Energy Group – REG] and private sector together so they can discuss on the issue.”

Challenges

Some of the challenges raised by the private sector, especially power investment players, include high import taxes on solar power materials, which is currently at 25 per cent, sudden cancellation of Power Purchase Agreement (PPA) signed between REG and investors, bureaucratic PPA registration process, among others.

Edward Ndayisaba, the vice-chairperson of Energy Private Developer, said, "Sudden cancellation of PPA causes huge losses to investors while those who want to invest in the sector wait for long to be cleared.”

He said most of them are discouraged by the long process it takes to finalise PPA, which they said sometimes take up to two years.

Gasamagera said the private sector cannot deal with all the challenges on their own, but since "the senators are well aware of our challenges, we hope for advocacy to help us find a sustainable solution.”

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