Regulating a growing energy sector for better investments and quality services

BY JOSEPH MUDINGU Rwanda Utilities Regulatory Authority (RURA) which has a mission to regulate certain public utilities including the energy sector has played a big role in the improvement and bringing closer to the people quality services in in the last seven years. RURA’s mandate in the Energy, Water and Sanitation sector is to control and regulate it in an efficient, sustainable and reliable manner by being transparent and fair for the benefit of all stakeholders. As this sector constitutes a critical input in economic sectors like manufacturing, construction, mining and agro-processing; the government has fully recognized that the availability of reliable power supply and water is not only a pre-requisite for economic growth but also for social prosperity and human development. Caption: H.E. Paul KAGAME, President of the Republic of Rwanda innaugulates Kivuwatts Regulating for a growing energy sector According to the management of RURA during an interview on the last seven years achievements in the Energy sector, the amount of electricity produced in the country increased from 96MW in 2011 to 205MW in June 2017. The Head of Energy, Water and Sanitation at RURA Eng. Alfred Dusenge Byigero says that RURA has done a lot in helping key players in the energy sector to improve and to provide better quality services to citizens in Rwanda. RURA’s roles as a regulator in the energy sector is to offer licenses and permits to those who wish to offer services related to providing electricity. RURA has already given out a number of licenses to people offering services in the energy sector. Under the institution that is responsible for electricity, Energy Utility Corporation Limited (EUCL), RURA gave four categories of licenses that included; electricity generation, electricity transmission, distribution of electricity and trading in electricity within the country and abroad. “RURA has so far given out four licenses to EUCL, 15 provisional licenses to investors and we have also provided 22 licenses to people dealing in electrical installation,” says Eng. Byigero. Caption: Eng. Alfred Dusenge Byigero, Head of Energy, Water and Sanitation at RURA The engineer says that apart from issuing licenses, RURA is also responsible for putting in place regulations and guidelines that ensure that the services provided in the Energy, Water and Sanitation sector add value to the country’s economy, the consumers and the service providers. RURA also inspects and ensures that service providers in the Energy sector are following these regulations and that the services provided are of quality and reach the consumers among which are the very poor and those in rural areas. The regulator is also responsible for reviewing trading power and water purchase agreements and to ensure fair market competition for those providing these services, advising the Government on policies and issues related to Energy sector and tariff setting, among others. So far, out of the 21 licenses that have been issued, 13 are already operational while 22 electrical installations permits of different classes have also been issued so far. Laws and Regulations It is evident that putting in place laws and regulations has helped Rwanda in improving the energy, water and sanitation sector in the last seven years. In the year 2011-2012, the number of people that were accessing electricity was only 10% which has since tripled to 30%. All these achievements have been reached because of the good policies that were put in place by the government of Rwanda to develop the energy sector. “Many power plants have been built, feeding the national grid including a solar plant built in Rwamagana that has installed capacity of producing 8.5 megawatts. In 2015, His Excellency Paul Kagame, President of the Republic of Rwanda inaugurated the Nyabarongo 1 Hydropower Plant (HPP) that has the capacity to generate 28 megawatts of electricity, with two units of 14 megawatts each. The Hydroelectric power plant is located in Mushishiro Sector, Muhanga District, Southern Province and has been supplying electricity to the national grid since October 2014 “The establishments of Kivuwatt methane gas power plant on Lake Kivu that was commissioned in January 2016 is also expected to add 100 MW on the national grid after the two phases of construction are completed; the first phase is producing 26 megawatts while the second phase will produce 74 megawatts after completion” said Eng. Byigero. Reforms in the Electricity sector According to Eng. Byigero, the Liberalization of the Electricity market by the enactment of the law No 21/2011 of 23/06/2011 governing electricity in Rwanda has done a lot in reforming the sector. “Operationalization of this law is on track to pave way for an efficient and sustainable liberalized power market where investors are free to join and invest in the sector” said Byigero. In October 2013, the Government of Rwanda formally approved to split former EWSA (Energy, Water and Sanitation Authority) into two corporate companies (REG and WASAC) to take over the responsibility for the operation of electricity and water utilities respectively. The aim of the reform was to corporatize and ring-fence electricity and water operations so as to achieve significant improvements in planning, private sector engagement, efficiency and quality of service provision. Increase of investors in the energy sector The good policies have brought about increase in the number of entrepreneurs investing in the energy sector and today, over 13 Independent Power Producers (IPPs) are selling bulk electricity to EUCL. The share of Independent Power Producers-IPPs in the private sector went from 0.35% in 2010 to 51% in March 2017. This tremendous increase of IPPs share is due to a conducive regulatory environment put in place to attract private investment in the Electricity and Renewable Energy. About 50% of the total installed Generation is from renewable Energy (Hydro and Solar). The government is continuing to work on policies that are meant to increase efficiency and ease measures for those investors in the energy and water sector to carry out business. The quality of electricity service improved significantly during the last 7 years and currently there are no planned load shedding as the supply is enough to meet the demand with a reserve margin of about 20%. The establishment of REG branches in all the districts helped to improve service delivery of the Energy Utility Corporation Limited (EUCL). The simplified (Light handed) regulation adopted by RURA contributed enormously to the acceleration of electricity access rate in rural areas whereby customers are connected through the most cost effective option (Grid connection, Mini-grid or Solar Home Systems). There has also been socio economic transformation observed in the rural areas that are connected, bringing into creation of small businesses and Small and Medium Enterprises. The number of households accessing electricity has increased from 10% in 2011 to 30% in 2017 and tariffs for the ordinary users have been reduced. Renewable Energy Eng. Alfred D. Byigero says that the production of electricity through renewable and solar energy has continued to increase and today they contribute 50% of the power in Rwanda. Caption: Rwanda has the fastest solar farm in Africa Lower tariffs RURA is responsible for putting in place tariffs and setting prices in the energy sector. The institution has done a lot in seeing that prices of electricity are reduced in order to achieve development in the country. “For those very poor people, electricity tariffs were reduced for low income households to help them access electricity to meet their basic needs like lighting , powering small appliances such as radios, TVs, phone charging, among others.” Electricity tariffs were reduced for industries in order to make them competitive in the region as electricity consumption constitutes one of the key cost driver in the manufacturing industry. Also Hotels, Water Treatment Plants and Pumping stations, Telecom Towers were given a preferential tariff because of their impact in the country’s economy Gas and Downstream Petroleum Sub-sector In general, there has been a tremendous increase in the use of Petroleum and Gas products in the country due to the new policies and regulations that have been put in place by RURA. RURA recently started to control petroleum and gas products because previously it was only controlling the infrastructure on petroleum and gas products like the construction of petrol stations and other services. RURA was given rights to control petroleum and gas products in 2016 and now has the right to control importation of gas and petroleum products in the country, fixing prices, its usage and many others. A law was put in place in 2013 to control buying and selling of petroleum and gas products. There are regulations on the use and the construction of petrol storage facilities, laws that govern the use of gas for cooking and other uses. There are also regulations that govern the building of petrol stations. From 2014, people no longer build petrol stations in places of their choice. “We have so far given out 58 licenses to businessmen, allowing them to build petrol stations and one license to one enterprise to build petrol storage tanks in the country. We have also given out nine provisional licenses to businessmen who are interested in transporting gas and petroleum products,” he explained. RURA oversees activities in line with energy, water and sanitation to ensure quality services, safety and reach to all citizens. Storage of petroleum products There has been an improvement in the way petroleum products are stored. In 2011 there were very few petrol storage facilities in that Rwanda had the capacity to store petrol reserves that would last for one and half months totaling to 31 million liters. Today, the capacity has more than tripled making it possible to store over 74,075,000,000 liters More than Twenty (20) oil-marketing companies are currently involved in the importation, transportation, storage, and retail of petroleum products. Rwanda today has 280 stations with 58 of them having installation licenses from RURA. Number of Gas users increased The number of people using gas for cooking in Kigali city has grown from 8% in 2011 to 12% and from 2.3% in 2012 to the current 3.5%. The increase of LPG penetration to 12% of the households in Kigali and 3.5% in other urban areas is considered “physiologic” under current economic growth. “In our plan, we expect the number of those using gas in Kigali city to have reached 30% and that of people in secondary cities to have reached 10% by 2020,” explains Byigero. The doubling of LPG penetration to 30% in Kigali and 10% in other urban areas is tentatively set as a realistic target if appropriate subsidy policies are put in place such as tax exemption for LPG and cylinders. What people say Some of the people who talked to The NewTimes about the energy services offered in this sector say that a lot has changed in the last seven years. According to Mugabe John Bosco who works at a metal fabrication workshop located near Sonatube in Kicukiro says that the stable electricity supply has enabled them to do business efficiently. According to Mugabe, issues regarding power cuts have become very few compared to the situation back in 2011 when a day would never go by without power cuts which used to affect them dearly. “A lot has changed since then and we are really proud of having continuous power supply. We used to delay delivering our clients’ work because of power cuts because our kind of work depends a lot on electricity” says Mugabe He however says that today there are no power cuts and the only time when they experience power cuts, is when they are repairing wire lines or replacing old poles. “We do our work and deliver on time to our clients knowing that there will be no power cuts. If power cuts occur, it’s temporary and we know that those responsible at Energy Utility Corporation Limited (EUCL) are working or doing repairs in the area,” Mugabe adds. Another Mukamusoni Odette who used to use fire wood and charcoal and has since turned to gas for cooking says a lot has changed in the last seven years. RURA’s regulation in the energy sector has helped us realize that we can use gas as a replacement for fire wood. “Back then when I used to relay on fire wood for cooking, there was a lot of inconvenience both in the availability of wood and the cumbersomeness in using it for cooking. Now I do my cooking indoor and it makes my home very clean and tidy” says Mukamusoni According to Mukamusoni, the price for gas is now affordable and we no longer need to relay on fire wood which is something the government of Rwanda wants to do away with in the next few years according to the EDPRS 11.

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Regulating a growing energy sector for better investments and quality services