Producers seek solutions for power, water woes

They have complained about fluctuations in power and water supply, as well as high power and water bills for long. Consultations have been held with the government and other stakeholders over time to get a remedy, but no concrete solution is in sight yet. Despite the grievances, the manufacturing sector had not come out with data to indicate the exact losses they are incurring as a result of power and water shortage or high charges. To understand the magnitude of these challenges, a study has been launched by industrialists and the private sector body to look into the effects of high costs of energy and water bills on the manufacturing sector. The study, being jointly done by the Rwanda Manufactures Association (RAM) and Private Sector Federation (PSF), is supported by TradeMark East Africa and is geared towards establishing the impact high energy and water bills, among others, have had on the country’s industrial sector, Claudine Mukeshimana, RAM executive director, said. Mukeshimana said industrialists currently part with Rwf96 per unit during the day and Rwf126 per unit at night, under the time of use tariff package. Last year, there was an uproar among manufacturers when the Water and Sanitation Corporation (WASAC) the then Energy, Water and Sanitation Authority, suggested an increase in urban water tariffs. The water body had proposed to increase Urban water tariffs for industrialists by 49 per cent form Rwf593 per cubic meter to Rwf885 per cubic meter, VAT exclusive, which prompted manufacturers to petition the Rwanda Utilities Regulatory Authority (RURA) to intervene. The matter was never resolved. However, industrialists are hopeful the study will help in resolving the matter. The study is expected to come up with recommendations on how to address the challenge, and the manufacturers are hopeful they will be supported by policy-makers and other stakeholders. Alex Ruzibukira, the director general for investments at the Ministry of Trade and Industry, said efforts are ongoing to ensure industrialists grievances are addressed. “Our priority is to ensure that we reduce the cost of production…Government and stakeholders in the private sector are working hard to provide more energy to ensure stable supply, especially to the industrial sector. This, we believe, will play a central role in reducing the cost of production,” Ruzibukira, who doubles as the head of the special economic zone, said. This will also help attract more investors into the country, he added. Ruzibukira also revealed that the ministry is aware of the challenges and is working with RURA to ensure that the matter is resolved. “RURA is also championing the study and is expected to come up with a preference treatment for industries in regard to power and water bills,” he said. Manufacturers have complained on many occasions that high power charges were eating into their profits, thanks to increased cost of production. Patrick Makuza, the director of Rwanda Foam, explained that this also affects commodity pricing. “It is, therefore, crucial that such a study is conducted to establish ways on how the challenges can be addressed,” Makuza said. Earlier studies In 2012, Private Sector Federation prepared a strategy and action plan to address some of the challenges in the energy sector. Inadequate infrastructure and power fees were identified as key bottlenecks to improving Rwanda’s competitiveness then. For instance, Rwanda’s power tariffs at around $0.20/kWh was the already high regional averages of $0.10-0.12/kWh. Transport costs at $165 per tonne per kilometre were almost twice the regional average of $95 per tonne per kilometer. The private sector body recommended scaling up of investments in infrastructure development to ease transport woes and boost power generation. Ernest Mazimpaka, an energy consultant and author of the strategy, told Business Times that industrialists lose a lot of power because they still use outdated technology in their production processes. “The energy sector has changed drastically over the last few years… We are using more energy and energy prices are perhaps more volatile and unpredictable than ever before,” Mazimpaka said. He said a landlocked country like Rwanda needs to ensure steady energy supply to spur industrial growth. More power on the way Government is projecting to generate about 563MW of power by 2017. There are also ongoing plans to import more than 430MW from Kenya and Ethiopia. Already the country plans to import 30MW of electricity from Kenya by October this year. This will greatly boost Rwanda’s current electricity generation capacity, which stands at 155MW. This year, over 40MW of power was added onto the grid; 28MW from the Nyabarongo I power plant, Giciiye I power plant in Nyabihu District contributed 4MW, while Rusizi power plant added 4MW and Giggawatt Solar power plant 8.5MW. About 15MW is expected on line next year from the Gishoma peat plant. Antoine Manzi, the director for advocacy at the Private Sector Federation, said inadequate power supply has greatly affected the industrial sector growth. Energy incentives To encourage investors into the energy sector, the proposed investment code is expected to see slashing of corporate income tax for energy investors from 30 per cent to 15 per cent.

News

Producers seek solutions for power, water woes