EDPRS: Energy sector poised to register phenomenal gains

BY GODFREY NTAGUNGIRA Energy Sector Baseline Scenario According to the national energy mix 86% of the energy sources emanates from biomass, whereas 11% is from hydrocarbons and 3% is principally sourced from electric power. Biomass is in turn sourced from firewood, charcoal or agricultural residues mainly for cooking purposes within Rwandan households. This strong reliance on biomass may lead to depletion of forest resources and soil erosion if not sustainably managed. Hydrocarbons in Rwanda are mainly used in the transport sector, but also for the production of electricity through diesel generators. 42% of the electricity produced in Rwanda is produced by diesel generators. On the other hand 55% of national electric energy is produced from Hydropower sources; this equals an installed capacity of 42.8 MW. Out of this Rwanda is importing around 12 MW from Sinalec as regional tripartite power producer involving parties from Burundi and the Democratic Republic of Congo. The national hydro power plants have been rehabilitated and water level management has improved to reach almost the maximum production capacity. Reports indicate that power generation plans have been developed for new national and regional hydro projects, while efforts have been geared up to step up the methane-to-power projects. Heavy fuel oil based generation is also on the upswing because the generation cost per MW is substantially lower compared to diesel based generation. Electricity supply is currently stable without load shedding and is sold at Rwf112 to the end retail consumers. Currently the national power utility company Electrogaz supplies electricity to around 92,000 customers. 70% of the produced energy today is consumed in Kigali. Specific strategic interventions are currently being developed to increase access to electricity through extension of the national grid and through the set up of isolated grids from micro-hydro plants and through decentralised energy sources such as solar energy for electrification of remote public institutions and households. In the EDPRS period the energy sub-sector is expected to connect 200,000 households to electricity, compared to 70,000 households at present, and it is projected to connect to over 300 administrative centres and service delivery points, 1,000 schools, and 180 health centres countrywide. The EDPRS interventions The EDPRS sets a clear road map for the energy sector till 2012. This includes: 1. Increased access (Generation, Transmission and Distribution for domestic and export purposes). 2. Reduced cost of service and the introduction of cost reflective tariffs. 3. Energy diversification and security (going beyond hydro and methane). 4. Strengthening governance framework and institutional capacity. The overall target of the government is to boost connectivity from the 110,000 to 350.000 customers by 2012 under the EDPRS energy program. This year alone Electrogaz managed to connect 23,000 new customers bringing the number to 110,000 customers. It is expected that under the EDPRS energy program the total capacity will increase from the present 45MW to 130MW by 2012 mainly through the generation of 50MW more of hydro-electric power, while Lake Kivu methane gas reserves is projected to bring in another 25MW of energy. The Government is implementing a planned increase in generating capacity from 60MW of installed capacity to 165 MW by 2012 for domestic production. These include: * 82MW from Lake Kivu methane gas (conservative figures, 30 MW by end of ‘09) * Methane gas pilot plant gas flaring expected before the end of this month. First time in the world for this kind of technology. * 37MW from 2 large hydro power projects, 26MW from micro hydro power plants. * 20MW from 1 heavy fuel oil plant, expected to be operational by December 2008. * Efficient delivery of oil products through a pipeline linking Kampala and Rwanda. * 250KW generated from the Kigali solar plant are already operational. * Several investors are interested in developing waste to energy generation plants. * The geothermal as well as the wind potential of Rwanda is currently under assessment. Transmission and Distribution plans 2009-2012 The Government is working on implementing an Electricity Roll Out Program to increase access from 5% to 16% through extending the grid by about 4,000km, using least cost technology and improving performance. By 2012 and where possible before, access shall be extended to 100% of clinics,100% of local administration offices in the country, and to about 50% of schools either through direct electricity grid connection, through solar energy or through isolated grids from micro-hydro sources. The government will create an enabling environment that can support companies servicing the energy sector and will train 300 professionals to ensure that the new generating capacity is adequately maintained. The unit costs of electricity generation are two and a half times higher in Rwanda than in neighbouring countries. Heavy investment in infrastructure will reduce business costs by improving the quantity and quality of energy supplied to urban and rural areas, improving the transport network (roads connecting markets, bridges, airports and regional railways), expanding ICT (both provision and utilisation) and improving water infrastructure for irrigation. Regulatory and national energy security issues Appropriate attention should be given to specific but critical issues relating to adoption of electricity and gas legislation, regulation and de-taxation of renewable energy and energy efficiency imports. Efforts will be made to improve the quality and continuity of electricity supply by improving the maintenance of generation and transmission equipment by fully trained staff. Rwanda projects that by 2020, at least 35 % of the population will be connected to electricity (up from the current 6%) and the consumption of wood will decrease from the current 94% to 50% of national energy consumption. To ensure energy security the further exploitation of the unique and promising option for Rwanda to produce electricity from Methane Gas from Lake Kivu in Western Rwanda with a potential to produce 350MW of power is under tremendous consideration and support from government. The Government is thus negotiating gas concessions and power purchase agreement with various private sector utilities. Further development of hydro power is seen as critical for ensuring an optimum energy mix to boost security. Thus new generation projects at different stages of development are well underway at both national and regional levels. Rwanda is also exploring its geothermal potential along the Rift valley while at the same time it is increasing the use of solar energy for remote institutions and households. Within power generation the Government is also engaging in the development of a methane gas to liquid project. A number of investors have already shown interest, but the project is in the feasibility stage to date. The production of liquid fuel within the country would reduce the dependence on import of petroleum products and thus the burden on the national economy through saving foreign currency is set to be achieved. The recent discovery of oil in the East African Rift System in Uganda and the analysis of satellite images indicate that Rwanda might be a potential oil resource holder as well. An exploration agreement has been signed with a private company that is currently conducting an airborne magnetic and gravity survey to analyse the sedimentation area in the Kivu Basin. Other forms of strategies are geared towards widening the mix even further. Studies related to the energy sector has indicated possibilities of producing biogas from geranium leaves and sorghum stems. Installation of biodigesters for several institutions and private entities is underway. Retrofitting of petrol engines to use biogas, the construction of several improved stove models that operate on sawdust, wood, peat, or briquettes of various origins as well as the pyrolysis of peat include some of these measures. Thus in summary the EDPRS period will be one of achieving visible results in terms of ensuring the attainment of the national energy security through actualizing the development of an optimum energy mix. Electricity network The national grid consists of high and medium voltage transmission lines and low voltage distribution lines under management by Electrogaz. With support from Minifra, Electrogaz is aiming at increasing electricity connections to at least 350,000 consumers by 2012. Reports indicate that this will require an extension of the network by approximately 4,000 km of transmission and distribution lines, a rehabilitation of the existing network and a reduction of technical as well as commercial losses. This will be achieved through improved technologies and maintenance as well as through tracking attempted fraud by individuals. Planned Electrogaz activities for 2008 include the connection of about 16,000 new customers, a network extension of 125 km of medium and low voltage lines and the rehabilitation of 281 km of medium and low voltage lines. Currently Electrogaz is supplying stable power to 92,000 customers out of which 80% are using the cash power system which requires prepayment and buying units from Electrogaz vendors. Ultimately the target is to transform the whole system into prepaid connections. In Kigali, local connections to the distribution network have been outsourced to the private sector on a testing basis. Whereas in the long run, Electrogaz is aiming at gradually transferring distribution networks to the private investors, just as it is now for the generation. The Kampala - Kigali Oil Pipeline Project Oil products for the Rwandan market come almost exclusively via the Northern Corridor: from the Kenyan port of Mombasa on the Indian Ocean through Kenya where a pipeline runs from Mombasa to Eldoret - from where they are distributed by truck tankers to Uganda, Rwanda, Burundi and parts of the DRC. The long distance from Mombasa increases oil product costs, as well as vulnerability and dependence. The dependence on Kenya was especially felt during the recent crisis in the month of December when the only alternative route was through Tanzania. In order to increase supply reliability and minimize the transport cost of imported oil products, the Government of Rwanda has joined Kenya and Uganda in the east African oil pipeline project. Extension of the existing pipeline from Eldoret to Kampala was awarded to Tamoil East Africa, through a concession contract. Rwanda is expecting to benefit from further extension of this pipeline from Kampala to Kigali, over a length of approximately 600 km. Currently a potential to further extent this pipeline to Bujumbura is under discussion. To this end, a memorandum of understanding was signed in March 2008 between the Government of Rwanda, the Government of Uganda and Tamoil Africa Holdings Ltd, a private company selected to develop the project on a build-own and operate model. The selected company, which is already incorporated in Rwanda, is soon starting on conducting the techno-feasibility study on the Kampala – Kigali pipeline. A market survey by SAIC (Science Applications International Cooperation), carried out through financial support from the United States Trade Development Agency, confirmed the project’s commercial viability where the study points out that the construction of this pipeline is expected to lower the cost of trucking from US$56.89 per cubic meter to about US$42.44 per cubic meter, hence easing the oil tariff structure. The construction of the Kampala-Kigali Pipeline will create a need for additional investment in storage capacity of the country. The existing storage in Kigali can accommodate up to 17,500 cubic meters of petroleum products. In order to meet the growing demand of petroleum products, two storage facilities, Bigogwe with a capacity of 5,000 cubic meters and Rwabuye with a capacity of 4,000 cubic meters, are being rehabilitated through the Government budget. Works on Bigogwe is nearing completion and works on Rwabuye will start soon. Prospects for Oil Exploration in Rwanda Given Rwanda’s dependency on oil imports today, the Ministry of Infrastructure is seriously assessing possibilities of oil development in Rwanda, through exploration and conversion. Such initiatives, though in early stages are likely to bring significant economic gain to the country in terms of trade balance. Rwanda has recently registered an increased interest of international private companies in oil exploration especially in the Western Rift Valley. This development is the direct result of the recent oil discovery in the Northern part of the Rift Valley in Uganda by Heritage Company. The structural similarities between the two sides of the rift valley appear to be the main factor for the renewed interest in oil exploration in Rwanda. The presence of methane gas dissolved in the deep waters of Kivu, which originates partly from the earth crust, is interpreted by some experts as an indication of probable oil presence below the Lake sediments. The area under survey is in the Western part of Rwanda along Lake Kivu and covers 1,631 sq kms in area. After due study of the existing literature, Vangold embarked on a satellite study of the Lake that suggests that there are a number of oil seeps on the surface of Lake Kivu. The indications were positive enough to embark further on an airborne magnetic and gravity survey of the exploration area, which was undertaken in September 2008. 2086 km of airborne survey were recorded and the data was analyzed to indicate the size and nature of the Sediment Basin under and around Lake Kivu. The results of this survey will be available early 2009. However it is certain that additional exploration has to be undertaken. More detailed magnetic and gravity data shall be collected from a boat survey on the Lake. If all the indications for petroleum potential remain positive, Vangold in cooperation with other partners will embark on a seismic survey next year. Other Initiatives In a bid to reduce dependency on conventional oil imports, new concepts to produce hydrocarbons locally, in partnership with the private sector, are presently being discussed. Proposals have been received from a number of investors. One promising endeavor is the conversion of Kivu Methane Gas to Liquid. It is technically possible to transform this gas into either LPG or even diesel, which could be used to drive ordinary cars or other engines. Another potential option Rwanda currently looking into is the local production of biofuels from plants like Jatropha among others. Several trees have recently been planted for this purpose in the Eastern Region of Rwanda. The future seems promising. Wind Energy in Rwanda In Rwanda, the development of wind energy has not yet been given priority, because of the lack of detailed and reliable information on wind regimes and potential exploitation sites. However, since demand for electricity is growing and we are trying to diversify our energy sources as much as possible the Government is currently exploring our national generation potential and possibilities of wind energy development. In Africa only a few countries have so far been able to establish a consistent program for using wind energy, namely South Africa, Egypt, Morocco and Tunisia, where a total capacity of 1000 MW has been installed to date. This is particularly interesting for our rural electrification objectives, because wind energy can exploited and distributed on the spot, wherever the wind regime allows, and could thus distribute power to areas far from our national grid. Moreover a turbine of 300 KW could be sufficient in supplying more than 1000 households with electricity. Ongoing initiatives: The first step in exploring our national potential is the development of a wind atlas. This atlas will enable us to identify windy sites and the estimated exploitable wind energy capacity throughout the country. This will require detailed meteorological surveys and the erection of wind potential measurement instruments in promising sites. Moreover data will have to be collected over a period of about one year to gain valid results. The necessary studies for the development of the wind atlas will start this year and are financially supported by the Belgian Government. Next steps shall include a pilot operation of setting up two or three wind turbines of 100 KW to 300 KW through funding of the European Commission in an effort to improve access to electricity in rural areas. All these initiatives will then be harmonized with the development of a strategy for wind energy exploitation, taking into account not only the meteorological and technical potential but also the institutional, regulatory and financial mechanisms for successful implementation. The study will start late 2008. Ends

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EDPRS: Energy sector poised to register phenomenal gains