How Rwanda, region can boost power generation and access

Last week, Rwanda joined the global universal energy initiative, Sustainable Energy for All (SE4All), a United Nations-led initiative geared toward actions and commitments to positively transform the world’s energy systems. The initiative promotes universal access to energy to facilitate sustainable development. Robert Nyamvumba, the energy division manager at the Ministry of Infrastructure, said the plan is to make sure all Rwandan households have at least basic levels of access to power by 2020, while government targets moderate access to electricity 10 years later. Rwanda is targeting to increase power output to at least 563MW of electricity by 2018, from the current 190MW and connect over 70 per cent of the population by 2020. Jean Bosco Mugiraneza, the Rwanda Energy Group (REG) chief executive officer, said the utility is looking to scale up power distribution and supply, as well as increase efficiency to meet increasing demand for electricity in the country. To meet power demand, government, in November last year, announced it would invest some $3 billion in the sector, while the private sector expected to inject in another about $1.3 billion. These joint efforts are essential for Rwanda to realise its energy targets as planned, experts say. Efficiency instrumental However, they argue that for Rwanda to realise its energy potential will also require removal of the structural bottlenecks to help reduce the cost of power and facilitate industrial growth and trade. Dr Kipyego Cheluget, the Common Market for Eastern and Southern Africa (COMESA) assistant secretary general in-charge of programmes, said this may require a systematic analysis of possible strategies that would help the country meet its energy needs. Cheluget said there also need for the country and region as a whole to ensure energy efficiency, increase generation as well as improve transmission infrastructure. Supporting the development energy infrastructure at the national and regional is equally key for the country’s energy aspirations, Cheluget told Business Times. He urged Rwanda to strengthen efforts geared at resource mobilisation for bankable energy projects to achieve its energy aspirations. “Rwanda’s energy sector remains attractive to investors, not only because of the policy and regulatory instruments in place, but also the low electricity access levels, of only about 25 per cent, presents a huge opportunity for investment,” he said. He added that Rwanda has competitive electricity tariffs, ranging from 16 to 22 US cents per kilowatt-hour, with ambitious targets to increase power generation capacity and access. The country must, however, ensure sustainable optimal reduction of technical electricity losses to boost distribution capacity and achieve operational efficiency, according to Selestino Babungi, the managing director of Umeme Uganda, said. Babungi said efficient metering and billing of power consumed by users is integral to commercial management of an electricity utility. “Therefore, it is important for the country to ensure effective performance as a critical tool to ensure the financial viability of the energy industry,” he said on the sidelines of the just-concluded iPAD Kigali summit. Daniel-Alexander Schroth, the SE4all Africa hub co-ordinator, said infrastructure projects require huge resources, which governments alone may not afford “hence the need for strategic partnerships between the public and private sectors”. “For economies like Rwanda to generate sufficient power, they need to promote conducive and stable policy and regulatory provisions to attract investment,” he added. Currently, hydro-power accounts for 97.37MW of Rwanda’s total installed capacity, thermal is at 51.7MW, methane accounts for 3.6MW, while 8.75MW is produced from solar energy. Supporting regional energy initiatives More still, experts say, regional integration and joint development of projects will help Rwanda achieve its energy targets and ultimately lower costs. “Clearly, there are lessons that other countries can learn from Rwanda to attract investment. The country’s aggressiveness to improve the investment environment should act as a catalyst for the region.” Cheluget said regional states need to remove structural and institutional weaknesses and ensure collective and sustainable energy sector development under EAC integration framework. Already, Rwanda plans to import 30MW from Kenya and another 400MW from Ethiopia by 2018. Catherine Collin, the European Investment Bank Eastern and Central Africa head, called on development finance institutions to play a key role in promoting private investments in the energy sector. She noted that significant financial support will be mobilised from multiple sources, including public and private sectors, and from bilateral and multilateral sources of finance, to help fund the country’s energy projects. “However, one of the main challenges of international assistance programmes that support energy sector development in Africa is meeting the needs of countries to boost access, and also ensure sustainable power generation to protect the planet,” she said. COMESA energy plan Some experts believe Rwanda is better off supporting initiatives aimed at boosting the region’s energy generation capacity. According to Cheluget, lack of infrastructure due to insufficient investment in the energy sector poses a serious challenge to COMESA member states, including Rwanda. He said most of the existing power infrastructure is inefficient and unreliable, making it difficult for member states to cater for the growing demand in the region. It is estimated that the infrastructure deficit has reduced the COMESA average annual growth rate to 5 per cent, from of 6 per cent. The total spending needs of the power sector in COMESA is estimated at $40.6 billion a year, or 6.4 per cent of the region’s GDP. Investment into the power sector is estimated at $11.6 billion, which is about 1.8 per cent of regional GDP and just over one-quarter of the funding required. About the COMESA energy programme The main objective of the programme is to promote regional co-operation in energy development, trade and capacity building to address the supply constrains and reduce the cost of doing business, as well as enhance COMESA competitiveness. It also seeks to harmonise energy policy and regulatory frameworks, facilitate trade in energy, and development of regional energy infrastructure in the region.

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How Rwanda, region can boost power generation and access