REG chief explains increase in electricity tariff

Rwanda Utilities Regulatory Authority (RURA), last week, released new tariffs for water and electricity meant to become effective September 1. Water tariff will increase by 19 per cent, while electricity tariffs for small-scale consumers will see an increase of 35 per cent. And, having electricity tariffs revised downwards could wait a little longer as the country still relies heavily on thermal power. Thermal energy, according to Jean-Bosco Mugiraneza, the Chief Executive of Rwanda Energy Group Ltd, is very expensive compared to hydro power. Mugiraneza talked to The New Times’ Peterson Tumwebaze about what it will take to bring down power tariffs and connect more than 70 per cent of the population to the grid by 2018. Excerpts; You have managed to increase power generation from 110MW in 2013, to the current 160MW but rather than lower tariffs, you have increased them lately, why is this so? Power tariffs will come down, but it may take some two to three years before we revise them downwards. This is because we still have thermal power plants, which are very expensive to operate compared to hydropower plants. (Electricity tariff will increase by 35 per cent for low voltage users, including residential and non-residential consumers, where the price will go up from Rwf134 per kilowatt to Rwf182 per kilowatt. For the medium voltage rates (industrial consumers), the tariff will remain Rwf126 per kilowatt.) So what will it take to have tariffs revised downwards? Once we phase out the thermal power plants and complete the KivuWatt project, which is projected to generate 100MW, the tariff will automatically come down. We are also hoping to get 30MW from Kenya and this will further lower the tariffs. We are also counting on Mukungwa power plant, which will generate about 15MW. It is important to understand that the source of power, ultimately, determines the price, so the cheaper the source, the lower the price. How will the growing demand for power affect pricing? It will not have a great impact because the most challenging factor is having the utility itself. What is causing the current rampant load-shedding? We do not have sufficient power supply because of the dry season that has led to reduced water levels and affected hydro power generation. But also, the infrastructure needs to be upgraded to meet the current demand for power across the country. What do you consider before carrying our load-shedding? We consider many things, but the first priority is given to the City of Kigali, where we have a big load, of about 45 per cent, of total electricity consumed. We also look at the power deficit to be able to fill the gap, which normally varies depending on the supply, season and activity. The presence of industries and security are also key areas we look at when load-shedding. There are, however, areas we cannot load-shed, except if there is a serious problem. What are these areas? They include the City of Kigali and the special economic zone, among others. However, it is not always our intention to interrupt power supply because when our customers have power, it means we are also making money. How is the current rate of urbanisation affecting the energy industry? The country is experiencing high levels of urbanisation that creates more pressure on the existing infrastructure, including electricity. The current economic growth requires that we upgrade the infrastructure. We are, for instance, replacing some transformers and that is why customers may experience power cuts. The problem of power cuts is serious in Eastern and Northern provinces, why? The problem in the Eastern Province has to do with the long distribution line from Kabarondo to Nyagatare, which is overloaded hence causing a voltage drop. To deal with the problem, we will have to construct a new substation line this fiscal year. And the issue in Karogi District is as a result of a transformer which got burnt, affecting the areas of Gisovu, Musanze and Rubavu. But we will replace it very soon. With Mukungwa hydropower plant undergoing rehabilitation, it means that other hydropower plants are optimised, leaving us with no reserve power. The reality, therefore, is that the power we produce and the demand are almost equal, which leaves us with no surplus. How do you communicate these challenges to customers? We always communicate through our social networks and the media. However, people must also always report in case of any power incidents. At our voltage centre, we control voltage transmission lines, but we do not know what happens at the client level. So unless we get the feedback, sometimes it becomes difficult to know what is happening. When do we expect the 30MW from Kenya? The transmission line of the 30MW from Kenya will be completed in September. We are also pushing the company working at a substation at Nsango to speed up its activities so that we have electricity by the end of the year. However, we may have to wait unti 2018 to get more 400MW (from Ethiopia) because it requires building stations and transmission lines between Kenya and Ethiopia before we can connect to Rwanda. We also have to upgrade our transmission lines to 400KV because of the long distance and as a counter measure to minimise losses. Will you have reached the target of 563MW by 2018; it looks like time is running out? I am optimistic that we shall have the power we need by 2018. Some projects have delayed, what is causing these delays? There are so many causes of delays; some are beyond our control, but we cannot delay a project that is under our control. For example, Gisoma will be completed in December and we then wait for the construction of the transmission lines. What will it take to connect more than 70 per cent of the population onto the national grid by 2018? This is possible, but will require everybody to work hard. The challenge, however, is the scattered settlement patterns. You, for example, have people living five to 10 kilometres away from transmission lines, making it a challenge to connect them onto the national grid. We, therefore, need to encourage people to live in organised settlements to easily access electricity and other social services as the Government continues to invest in infrastructure. We now boost of almost 87 per cent sectors having access to medium voltage transmission lines, but access is still down, because many homesteads are far away from these lines. Eighty per cent of all the hospitals and health centres are connected to the grid, while 43 per cent of schools are also connected. This, therefore, gives us confidence we will be able to reach our target. You have been encouraging industrialists to work at night; what are the advantages of that? At night power is available. And, there is special tariff for that. During peak hours, we are most likely to experience power cuts. Therefore, if you have factories working after peak hours, it helps minimise power cuts. Do you have a master plan detailing how you will achieve strategic objectives in the energy industry? We are currently working on one and hope to have it launched before the end of December. editorial@newtimes.co.rw

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REG chief explains increase in electricity tariff