KIGALI - The first phase of the methane gas extraction project in L. Kivu, which was to be completed by December last year, was given 31st December 2011 as its new deadline.

According to the Head of Oil and Gas Department in the Ministry of Infrastructure, Charles Nyirahuku, the one year extension was due to delays in issuing an environmental impact assessment certificate.

In March 2009, ContourGlobal, an American company, signed a deal worth US$325 with the government to develop an integrated gas extraction and electricity facility to provide 100MW of electricity to Rwanda and the East African region.

Nyirahuku said that the project met several challenges that delayed its completion, including delays in  impact assessment, a prerequisite for the project to kick off.

He added that CountourGlobal’s failure to sign a deal with Multilateral Investment Guarantee Agency (MIGA) for Public Risk Insurance, further contributed to the delays.

"It was reported earlier that MIGA is a financer, but we wish to clarify the matter; MIGA is not providing funds to the project, but rather insurance coverage against political risk,” Nyirahuku said.

"MIGA and Contour haven’t signed a permanent deal, but we are optimistic about a positive outcome.”

He also added the ContourGlobal planned to outsource new financers to provide better financing terms to the project
"A combination of debt and equity financing would benefit the project in spreading the risk between banks and the investors, and provide better financing terms which would result in a substantial electricity tariff reduction,” he said.

ContourGlobal, under its subsidiary, Project Kivuwatt, was designated to operate in two phases, the first becoming operational by December 2010 with the production of 25MW, while the second phase of 75MW going into operation by 2012.

Efforts to get comments from ContourGlobal’s Country Director, Jarmo Gummerus, proved futile as it was reported he was out of the country.

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