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EDPRS II: Energy Sector Strategic Plan
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REPUBLIC OF RWANDA
ENERGY SECTOR STRATEGIC PLAN
(2013-2018)
MINISTRY OF INFRASTRUCTURE
June - 2013
EDPRS II: Energy Sector Strategic Plan
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1 Acronyms and abbreviations Table 1: List of acronyms and abbreviations
ACRONYM DESCRIPTION
AfDB African Development Bank
BEST Biomass Energy Strategy
BTC Belgian Development Corporation
CBOs Community-Based Organization
CDF Community Development Fund
CDM Clean Development Mechanism
CFL Compact Fluorescent Lamp
COMESA Common Market for East and Southern Africa
DRC Democratic Republic of the Congo
EAC East African Community
EAPP East African Power Pool
EDPRS Economic Development and Poverty Reduction Strategy
ELECTROGAZ Établissement Rwandais de Distribution de l'Eau, de l'Electricité et de Gaz
ESSP Energy Sector Strategic Plan
EU European Union
EWSA Energy Water and Sanitation Authority
FRW Rwandan Franc
GDP Gross Domestic Product
GEF Global Environmental Facility
GTZ German Technical Cooperation Agency
GWh Giga-Watt hour (measure of electrical energy)
HFO Heavy Fuel Oil
ICT Information and Communications Technology
IPP Independent Power Producer
KPI Key Performance Indicator
KWh Kilowatt-hour (Unit of electricity)
M&E Monitoring and Evaluation
MDGs Millennium Development Goals
MIFOTRA Ministry of Public Services, Skills Development and Labour
MINAGRI Ministry of Agriculture and Animal Resources
MINALOC Ministry of Local Government and Social Affairs
MINECOFIN Ministry of Finance and Economic Planning
MINIRENA Ministry of Environment and Lands
MINICOM Ministry of Commerce
MININFRA Ministry of Infrastructure
MOU Memorandum of Understanding
MTEF Medium Term Expenditure Framework
MW Megawatt (measure of electrical power or capacity)
NBI Nile Basin Initiative
NDBP National Domestic Biogas Programme
EDPRS II: Energy Sector Strategic Plan
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NELSAP Nile Equatorial Lakes Subsidiary Action Program
NICA National Inspectorate and Competition Authority
NGO Non-Government Organization
PM Prime Minister
PPA Power Purchase Agreement
PPP Public-Private Partnership
PSF Private Sector Federation
PV Photovoltaic
RBS Rwanda Bureau of Standards
RDB Rwanda Development Board
RECO Rwanda Electricity Corporation
REMA Rwanda Environment Management Authority
RRA Rwanda Revenue Authority
RURA Rwanda Utilities Regulatory Agency
RWASCO Rwanda Water and Sanitation Corporation
SINELAC Société Internationale d’Electricitédes Grands Lacs
SWAp Sector Wide Approach
SWG Sector Working Group
UNDP United Nations Development Program
VAT Value Added Tax
Vision 2020 Rwanda Vision 2020 (long-term development programme)
WB World Bank
EDPRS II: Energy Sector Strategic Plan
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Table of contents
1 Acronyms and abbreviations ............................................................................... ii
1. Introduction and executive summary .................................................................. 8
Introduction ................................................................................................................. 8
2 Overview of the Energy Sector .......................................................................... 11
2.1 Policy Context ................................................................................................. 11
2.2 Key sector challenges ..................................................................................... 13
2.2.1 High level strategy and link to EDPRS II objectives ........................................ 13
2.2.2 Policy Development ........................................................................................ 14
2.3 Electricity subsector ....................................................................................... 15
2.3.1 Off-grid Electricity: .......................................................................................... 16
2.3.2 On-grid Electricity ........................................................................................... 16
2.3.3 Recent Developments within the Electricity Sector ....................................... 17
2.3.4 Challenges within the Electricity sub-sector and proposed solutions ........... 22
2.4 Petroleum subsector ...................................................................................... 27
2.4.1 Recent Developments in petroleum sub-Sector ........................................... 29
2.4.2 Challenges and proposed solutions ................................................................ 30
2.5 Biomass energy subsector .............................................................................. 33
2.5.1 Recent Developments within the Sector ........................................................ 33
2.5.2 Challenges and proposed solutions ................................................................ 36
3 Strategic Framework ......................................................................................... 38
3.1 Mission and objectives of the energy sector.................................................. 38
3.2 Energy sector contribution to EDPRS II .......................................................... 38
3.2.1 Lessons leant from the EDPRS I ...................................................................... 38
3.3 Key projects to meet EDPRS II targets ............................................................ 39
3.3.1 EARP program and off-grid solutions ............................................................. 41
3.3.2 Understanding Electricity Demand ................................................................ 46
3.3.3 Development of a Generation and Transmission roadmap .......................... 50
3.3.4 Private sector engagement plan .................................................................... 56
EDPRS II: Energy Sector Strategic Plan
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3.3.5 Strengthening the Investment management ................................................. 60
3.3.6 Operational efficiencies and financially sustainability of the utility .............. 60
3.3.7 Use of Biomass and transition to alternatives ............................................... 63
3.3.8 Petroleum subsector ...................................................................................... 66
3.4 Contribution to EDPRS 2 thematic Areas/Priorities ....................................... 68
3.4.1 Economic transformation for rapid growth ................................................... 69
3.4.2 Rural Development ......................................................................................... 71
3.4.3 Productivity and youth employment.............................................................. 73
3.4.4 Accountable Governance ............................................................................... 73
3.4.5 Cross cutting issues mainstreaming ............................................................... 74
4 Implementation of the Sector Strategic Plan ...................................................... 81
4.1 Background and implementation plan ........................................................... 81
4.2 Sequencing of interventions ........................................................................... 82
4.2.1 Roles and responsibilities of energy sector partners and stakeholders ........ 82
4.2.2 The role of Central Government .................................................................... 82
4.2.3 Mechanisms for co-ordination and information sharing ............................... 88
5 Monitoring and Evaluation ................................................................................ 89
5.1 Energy Management Information System ..................................................... 90
5.2 Evaluation ....................................................................................................... 91
5.3 Communication .............................................................................................. 92
6 Cost and Financing ............................................................................................ 93
Annex 1: Generation Investment Roadmap ............................................................. 94
6.1 Peat-to-Power Generation ............................................................................. 94
6.2 Hydro power generation .................................................................................. 1
6.3 Methane gas-to-power generation .................................................................. 1
6.4 Geothermal power development ..................................................................... 2
Annex 2: Summary of costs and required financing ................................................... 4
Annex 3: Monitoring and Evaluation Matrix .............................................................. 7
EDPRS II: Energy Sector Strategic Plan
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List of figures
Figure 1 Illustrative view of portion of energy from different sources as planned by
2017 ................................................................................................................................. 12
Figure 2: Summary of EDPRS Vision, Objectives, Targets and approach ....................... 14
Figure 3 EWSA's decreasing cost to serve ....................................................................... 18
Figure 4: Correlation between energy consumption and development ......................... 24
Figure 5: EWSA's loss reduction plan .............................................................................. 26
Figure 6: Key challenges faced by the biomass subsector and high level solutions ....... 36
Figure 7: Objectives, goals and strategies to achieve EDPRS targets .............................. 39
Figure 8 Key policy priorities ........................................................................................... 40
Figure 9 Peak vs Absolute Demand ................................................................................. 46
Figure 10: Proposed energy generation mix ................................................................... 51
Figure 11: Generation roadmap to achieve 610 MW of installed capacity .................... 52
Figure 12 Projected capital costs ..................................................................................... 52
Figure 13: Transmission projects ..................................................................................... 55
Figure 14 Proposed competative process and responsibilities ....................................... 58
Figure 15 Projects to be submitted to competitive bidding process during EDPRS II
period ............................................................................................................................... 60
Figure 16: Impact of energy investments on EDPRS II thematic areas and priorities .... 68
Figure 17: Rwanda's internal migrations ......................................................................... 72
Figure 18: Peat to Power projects delivery plan ............................................................. 96
List of tables
Table 1: List of acronyms and abbreviations ..................................................................... ii
Table 2: High level policy considerations as outlined in the draft energy policy ............ 15
Table 3: New Time of Use (ToU) Tariff structure ............................................................ 19
Table 4: List of challenges and proposed sollutions ........................................................ 22
Table 5: Current Electricity consumption patterns ......................................................... 22
Table 6: Petroleum products importation (Litres) – 2011/12 ......................................... 28
Table 7: Petroleum products usage projections ............................................................. 29
EDPRS II: Energy Sector Strategic Plan
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Table 8: key challenges in the petroleum sub sector ...................................................... 30
Table 9: Proposed Solutions to Key challenges facing downstream petroleum sub-
sector ............................................................................................................................... 31
Table 10: Proposed Solutions to Key challenges in the Biomass sub-sector .................. 36
Table 11: Demand projections under different scenario (Generation requirements
including losses) .............................................................................................................. 47
Table 12: Overview of Rwanda's indigenous energy resources ...................................... 51
Table 13: Potential areas with for geothermal resources ................................................. 3
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1. Introduction and executive summary
Introduction
Access to safe, reliable and cost effective energy is essential if we are to achieve the ambitious
levels of growth defined under the Economic Development and Poverty Reduction Strategy
(EDPRS II). There is a strong correlation between a country’s energy usage and the level of
development. The energy sector in Rwanda consists of three components: Electricity, Biomass
and Petroleum, with each playing a key role in Rwanda’s transition to a middle income country
by the end of the decade.
Energy is a service and a key input into economic development and household activity.
Different sources of energy have different uses and there is need to ensure that the most
appropriate form of energy is available in a cost effective, reliable and sustainable manner. As
an example, it would be impossible to charge a mobile phone using biogas and its as well not
cost effective to use electricity for cooking.
The primary source of energy will continue to be biomass, principally used in cooking. The most
basic forms of Biomass are firewood and charcoal. Across the globe, firewood is associated with
environmental, social and health problems, stemming from deforestation and the emissions
from wood and charcoal burning respectively. Rwanda has had considerable success over
recent years in addressing these issues to the extent that its one of only a few countries in
Africa where there is not a major link between Biomass and the negative environmental effects
of deforestation. To address the social and health problems emanating from use of biomass,
government is promoting use of alternative fuels such as Biogas from animal and plant waste.
This will free up the time of women and children currently spent collecting firewood, giving
them enough time to study and undertake more productive commercial activities.
Electricity is an essential driver of modern technology and socio-economic development. Use of
electricity is required for both low consumption devices such as lights and mobile phones and
and large users such as industry which will enable industrial processing activities, value
addition, driving exports and job creation. Electricity access can be through on-grid connections
to households and businesses and off-grid solutions such as mini hydros as well as small solar
generation. Network connections require significant capital costs but are able to provide the
reliable, high voltage electricity required for commercial and large residential users. Our priority
is to extend the network to allow heavy users of electricity across the country to connect to the
grid. For lighter users of electricity, grid connections are unlikely to make economic sense in the
short term and as such, off-grid solutions such as Solar PV and Microhydros will be prefered.
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Overall, government intends to support 100% of the population with access to electricity by the
end of EDPRS II.
To keep pace with the increased demand for electricity, government will ensure increased
electricity generation capacity above the current capacity of around 110 MW. Approximately
45% of the existing generation capacity runs on expensive imported diesel. Diversifying away
from diesel generation will enable the government maintain a regionally competitive tariff
whilst eradicating subsidies to the energy tariff. There is considerable private sector interest in
electricity generation from Rwanda’s indigenous resources such as the recent private sector
peat deal to generate 100MW of electricity from south Akanyaru peat reserves. Similary, a
unique project to generate 25 MW of electricity from methane held in Lake Kivu is expected to
be commissioned in 2013. However, if we are to meet ambitious EDPRS targets for economic
growth, our demand for electricity could be as high as 563 MW by 2018 and we will need
continued investment from the private sector if we are to be able to satisfy this demand.
Herein this document, we have developed a detailed roadmap of investments which will allow
meeting of energy requirement. Around 70 MW of additional generation is likely to come from
Hydro, whilst targeting the development of around 200 MW from Rwanda’s peat reserves.
Further development of methane reserves in Lake Kivu could deliver up to 100 MW of
additional generation. The most exciting prospect however is Rwanda’s geothermal potential.
Geothermal power is reliable, environmentally sustainable and can provide power at low costs
that could help to accelerate Rwanda’s economic growth. Studies over recent years have
indicated a significant possibility a commercially viable geothermal resource. Detailed plans
have been developed to undertake exploratory drilling to confirm these studies and we expect
to break ground in 2013. Our roadmap includes around 50 MW of geothermal by 2017. The cost
of this additional generation will be around $1.5 Bn. Government intends to use limited
resources wisely to undertake activities to reduce perceived investment risks in order to
stimulate private investment.
The other component of Rwanda’s energy mix is petroleum. Petroleum products are essential
for industrial use, lighting, and transport. Over the course of economic development,
maintaining a stable supply of low-cost petroleum products will become more and more
important. This is particularly important in aviation. Rwanda is planning to position itself as a
regional air transport hub, as such, supply of low cost reliable aviation fuels is essential if this
ambition is to be realised.
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Summary of Strategies and Proposals ELECTRICITY
Electricity
Generation
Electricity Demand: The current projections of demand for electricity range between 250 and 470 MW;
requiring installed generation of 300 – 564 MW (considering a 20% reserve margin). EWSA will revise this
forecast each year to ensure generation that is inline with demand.
Electricity Generation: The current target is to have an installed capacity of 563 MW by 2018. Government
is prioritising developing the feasibility of different generation sources to reduce the perceived delivery
risks and lay ground for more private sector participation.
Access to Electricity Government will support programs to ensure that 100% of households get access to electricity through
grid and off-grid solutions by 2018. This will be done through;
Grid connections(48% of households): The plan is to extend the network of electricity across the
country for grid connections. The national grid will be extended across the entire country connecting
commercial consumers who will drive economic growth and households consuming sufficient
electricity to make the connections financially sustainable
Off-grid installations (52% of households): Households located in a significant distance away from the
grid or those consuming insufficient electricity to make a grid connection financially viable will be advised
to get access through off-grid solutions such as minigrids or solar PV solutions.
Tariff and Subsidies Subsidies: Government plans to eliminate subsidies to the tariff by 2015 whilst maintaining a regionally
competitive tariff. This will be made possible through phasing out the use of Diesel as a major component
of generation mix.
Tariff Segmentation: RURA will in consultation with EWSA review the tariff structure in 2013 to ensure
that it is aligned with the EDPRS II objectives of economic development and poverty reduction.
BIOMASS
Sustainable
biomass solutions
Government plans to decentralise implementation of Biomass programmes from central to local
government level to streamline implementation. Specifically, government :
Target the delivery of domestic BioGas digesters. Promote the use of bio digesters within
households and government institutions. The target is to deliver 100,000 bidigesters by 2017
Improved Cook-stoves (ICs). Increase penetration of improved cook-stoves (50% to 80%)
More efficient charcoal production: Support Improved wood harvesting and charcoal production
techniques by scaling up the level of training given to local cooperatives. Government will also continue to
support the market and research of biomass alternatives such as LPG and Peat briquettes
PETROLEUM
Security of supply Increase Security of supply: 4 months’ supply will be stored by government and private sector.
Decreased import costs and Increased price stability: Through promoting and facilitating bulk purchasing
of petroleum with Rwanda’s regional neighbours
Maintain and increase quality: Improve standards and testing to ensure consistently high quality.
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2 Overview of the Energy Sector Chapter outline
This chapter gives an overview of the Energy sector, outlining key strategic approaches which
will be deployed to deliver on the EDPRS II targets(Outlined in greater depth in chapter 3). The
chapter further discusses the current status of each of the three energy sub-sectors in detail
(Electricity, Biomass and Petroleum), outlining key challenges therein and providing respective
policy guidance.
2.1 Policy Context
Rwanda’s economy has been growing at an annual average rate of 8.3% and government is
targeting to achieve an annual average growth rate of 11.5% over the EDPRS period. The third
generation of Rwanda’s development strategy (EDPRS II) enshrined in its 4 thematic areas aims
at achieving rapid economic growth, rural development, productivity and youth employment
and accountable governance. Ensuring access to affordable and modern sources of energy is
essential if the above EDPRS objectives are to be achieved.
Energy is a complex and diverse sector requiring prudent planning and significant capital
investment. Currently around 85% of the overall primary energy consumption is based on
biomass (Over 90% of all households using biomass for cooking), 11% on petroleum products
(for transport, electricity generation and industrial use) and 4% on electricity.
Energy is required for diverse applications including heating and cooling, lighting, moving
machines among others. However, it should be noted that no single energy source will meet
Rwanda’s energy needs in isolation. Each energy source has its own unique characteristics and
the most appropriate purspose it serves better. The use of Electricity for cooking is not likely to
be financially viable in the short to medium term in Rwanda forexample but is economically
feasible for lighting and charging modern appliances, while petroleum products will be
preferred in the transport industry. Electricity can be accessed through either connection to the
national grid or using a solar home system. Selection of any of the appropriate technology can
only be done by weighing up these advantages against each of their social, environmental and
economic costs.
The figure on the following page illustrates a high-level proportion of energy expected to be
generated from respective sources including Bio-products1, Petroleum products and Electricity
for different uses. Bio-products covers fuels developed from Biological material including Biogas
1 Bio-products include; charcoal, biogas and Biofuels
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from waste matter and Biofuels from crops such as Jatropha. A red arrow illustrates where we
expect a significant increase in the usage of a particular energy source for an activity in order to
drive socio-economic growth and poverty reduction targeted under EDPRS II.
Figure 1 Illustrative view of portion of energy from different sources as planned by 2017
Note: A red arrow indicates a significant rise in use of a particular energy source for a given
activity
To summarise the transition across the three energy sources:
Bio-products: Government acknowledges that Bio-products will remain the most
appropriate and cost-effective source of energy for heating and cooking. The
government 5-year strategy is to encourage cleaner, more efficient and sustainable uses
of Bio-products by transitioning away from wood to more clean technologies such as
Biogas and promoting efficient charcoal harvesting and use.
Petroleum: The demand for petroleum products will continue to rise on account of
increased transport vehicles and expansion of the fleet for the National airline. The
reduction of imported diesel for electricity production will be more than off-set by the
increased need for petroleum products in transportation, particularly aviation, and
heavy industry.
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Electricity: Though it currently represents a small portion of our Energy mix, electricity is
vital for the provision of modern services such as manufacturing and ICT and increasing
levels of both generation and access capacity is vital if we are to achieve the levels of
economic growth and poverty reduction planned over the next 5-years.
2.2 Key sector challenges
Delivering on the Energy sector targets will require concerted efforts from government,
development partners and the private sector. The key challenges facing delivery can be
summed up into financing constraints, human and institutional capacity gaps as well as
difficulty in raising the required demand to ensure productive use of electricity.
Across the entire sector spectrum, capacity gaps have been identified in project management,
contract negotiation and enforcement. Proposed remedies to that effect for the above
mentioned capacity challenges have been mostly reflected in the priority policy Matrix herein
this document.
2.2.1 High level strategy and link to EDPRS II objectives
Rwanda’s high level energy strategy is “the provision of “appropriate, reliable and affordable
energy supplies for all Rwandans”. This is what will drive the economic growth necessary for
Rwanda to develop into a middle income country by 2020.
Link to EDPRS II objectives: It is important to note that the development of energy
infrastructure or the production of energy will not in itself drive economic growth and poverty
reduction. There is need to ensure that the most appropriate infrastructure is developed
efficiently to ensure that energy can be provided at a price affordable to majority of the
population:
Economic growth will be driven by uninterrupted provision of energy, particularly
electricity and petroleum products at prices that are stable and regionally competitive
to stimulate business development. The approach to meeting regionally competitive
prices for petroleum is undertaking bulkpurchasing arrangements and clear pricing
methodologies. For electricity, the approach is capital-driven with a requirement to
spend up to $2.7 Bn on infrastructure. For both approaches, a carefully conducted
demand forecast is essential to a void demand-supply mismatches and associated
unplanned expenditure.
Poverty Alleviation will be supported by the provision of cost effective and appropriate energy
solutions to the poor, particularly in rural areas where energy services are currently scarce or
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expensive. As illustrated on the previous page, Bio-products and electricity are the key sources
of energy for heating and cooking and modern energy uses such as communications
respectively. In order to meet our macro-level objectives, respective targets have been set
within the energy sector as highlighted in the figure below:
Figure 2: Summary of EDPRS Vision, Objectives, Targets and approach
Note: Proposed strategic approaches to be employed to deliver on Rwanda’s vision for the
energy sector are discussed in detail in chapter three. The following pages below present a
high-level summary of policy development within the sector and then a detailed discussion of
each of the energy sub-sectors:
2.2.2 Policy Development
The challenge to deliver on the vision and objectives outlined above is significant. There is need
to establish an enabling institutional framework embracing intergrated planning and
cohenrence in policy orientation. Clear policy statements to guide decision making have been
articulated in the draft Energy Policy- that guided the development of this document. The high-
level policy statements set out in this plan are presented below:
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Table 2: High level policy considerations as outlined in the draft energy policy
Cross Sector policy considerations
Use of
indigenous
energy resources
Indigenous energy resources will be preferred over imports. Further, government will give
preference on future generation of electricity from renewable energy resources over non-
renewable resources.
Energy efficiency
and conservation
Energy Efficiency will be a key component of sector planning. Government will provide
economic incentives where feasible for all users of energy to consume in an efficient
manner
Energy pricing
and subsidy
policies
Energy prices will generally transition to reflect the cost of supply. Where cross
subsidisation exists or government subsidies exist, these should be transparent with a
clear economic rationale.
Financing energy
sector
investments and
Private sector
participation
Private sector investments will be encouraged at all levels within the sector. Where
economic to do so, government will mitigate private sector risk in return for reduced costs
through lower financing costs. Government investments in the sector should only be
made where there is a clearly value-for-money as opposed to private delivery.
2.3 Electricity subsector
The provision of cost effective electricity to businesses and individuals is vital to drive economic
development and poverty reduction. Currently, Rwanda has one of the lowest per capita
electricity consumptions(42Kwh/year/capita) compared to 478 kWh for sub-Saharan Africa and
1,200 kWh for developing countries as a whole. Although the densely distributed population
should facilitate network expansion and access to electricity, presently only 16% of Rwanda’s
households (350,000 customers) are connected to the grid.
Overall, the country vision is to ensure universal access to electricity from both grid and off-grid
solutions, over the EDPRS II period. Detailed plans have been developed to spread the
electricity network across the country. In tandem with the relocation driven by urbanisation
and resettlement policy, this should bring the grid within reach of around 48-50% of the
population.
Off-grid electricity such as from solar lanterns can be supplied at a lower cost compared to on-
grid electricity. For low energy consuming households as well as those in a far distance2 away
from the National grid, off-grid electricity will be supplied mainly from microhydros and solar
home lanterns. The fact that off-grid solutions have restricted usage, usually limited to lighting
and basic electronics such as mobile phone charging and radios, grid connection will be
required for more energy intensive uses for heating and cooling as well as running heavy
2 Those in 5 metres away from the grid will be connected to off-grid energy sollutions
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machinery. Both of these forms of electricity will have a role to play in meeting our EDPRS
objectives.
2.3.1 Off-grid Electricity:
It is ossible for people to access electricity without the need to connect to the Electricity grid
network. In such instances electricity is provided through off-grid solutions ranging from solar
lanterns for lighting and charging phones to power from small hydro installations. These
solutions will not provide the voltage or the stability provided through a grid connection but are
often far more economical for low usage consumers due to reduced capital costs. Government
plans to ensure the remaining households(52%) off the National grid to benefit from either of
the two off-grid systems.
2.3.2 On-grid Electricity
Grid connections provide stable, high voltage electricity required to power large domestic and
industrial machinery which will facilitate a shift from the current agriculture based economy
towards industrialisation. Grid connections do however require significant capital investment
which needs to be financed and repaid. Calculations indicate that consumption would have to
reach around 130 KWH / month to fund these financing costs. Government plans to extend grid
network to cover 48% of the households by 2017/2018.
Over recent years, there has been an aggressive program to increase access to the electricity
services by all sectors of the economy especially industry and Small and Medium enterprises.
The current strategy is set to increase electricity access generation from the current 110.44 MW
of installed capacity to around 563 MW and connectivity from the current 16 percent (end June
2012) to around 48 % percent in 2017/2018.
The provision of Electricity is inherently complex in Rwanda and every where in the developing
world. A number of challenges and complexities are associated with power generation and
supply as discussed below;
1. Electricity cannot be stored: Unlike other Energy sources, Electricity cannot be stored
on a large scale3 resulting in two important properties:
a. Careful planning and operation of the network is required to allow power to
travel instantaneously from the source of generation to the end user. During this
3 In a number of countries Electricity is stored through pumped storage (ie pumping water up a hill) this is extremely inefficient and
only appropriate where a country has a very cheap base-load energy resource such as nuclear or geothermal. We are investigating
the potential for pumped storage as part of the Nyabarongo II scheme.
17
journey a significant amount of energy is lost as heat (around 20%). Proper
network planning and operation is essential to minimise these losses.
b. Generation output must continuously flex in line with end user demand; as will
be illustrated in chapter 3, user demand is not constant throughout the day. As a
result different generation technologies can fulfil different roles throughout the
day.
2. Electricity is capital intensive: Unlike other sources of energy such as petroleum where
the majority of the costs of consumption are variable associated with the commodity
cost, the majority of the costs of electricity production are associated with financing the
infrastructure investment, these costs are paid off over the useful (depreciated) life of
the asset – typically 15 – 25 years – leading to two key considerations:
a. A decision to invest or enter into an agreement with the private sector must
make sense not just for the next few years but for the entire life of the asset.
b. A small change in the financing costs will result in a large change in the total cost
of the infrastructure, and the long-term return brings with it inherent risks for
investors. As a result careful consideration must be given to ways to mitigate
investor risk.
2.3.3 Recent Developments within the Electricity Sector
In addition to the delivery of new generation and network infrastructure, a number of
significant Commercial / regulatory developments on the regional and international scene have
occurred over recent years:
2.3.3.1 Commercial / Regulatory developments
Evolution and Establishment of EWSA: The electricity sector has gone through some significant
changes in the last 12 years. The ELECTROGAZ, which had a monopoly for the production and
distribution of water and electricity until late 1990s, formally lost its monopoly power by a law
that was enacted in 1999. After extensive deliberations, ELECROGAZ was placed under a
management contract with Lahmayer International in 2003 which ended in 2006 when the
management of the company reverted to the Government and run by a Board of Directors. In
2008, ELECTROGAZ was split into the Rwanda Energy Corporation (RECO) and the Rwanda
Water and Sewerage Corporation (RWASCO) that were in 2011 integrated within the Energy
and Water and Sanitation Authority (EWSA). EWSA is responsible for generation, bulk
transmission and distribution and retailing functions on a commercial basis, while some of new
large generation projects are planned for development by the private sector that would sell to
the utility under Power Purchase Agreements.
The establishment of RURA: RURA was created in 2001, and is defined by law as an
autonomous entity with its own board of directors who are appointed by the Prime Minister's
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order. RURA’s mandate is to regulate an efficient, sustainable and reliable energy sector. To
address this mandate, the agency is responsible for promotion of competition, advising
government during formulation of energy policy, protecting consumers, educating
stakeholders, approving contractual undertakings with regard to distribution and transmission
of electricity and gas and most importantly approving requests for tariff changes.
Subsidisation and recent tariff adjustment: The average electricity tariff remained unaltered
between 2006 and 2012; accounting for inflation this represented decrease in real terms of
around 31%. Coupled with EWSA’s continued dependence on Diesel fuels this led to the need
to significantly subsidise the electricity tariff4. Such subsidies disproportionately benefit the
larger users of energy, typically businesses and wealthy urban population; a subsidised tariff
also acts as a disincentive to invest in our country’s energy sector.
EWSA’s actual cost to generate
1kwh of electricity in 2011/12 was
around 210 RWF; almost double
the current tariff.
However as illustrated in the figure
on the left, EWSA’s cost to serve
(the unsubsidised cost of supplying
energy) is projected to drop
significantly over the coming years
as new sources of generation
(notable 25 MW of methane from
KivuWatt and 28 MW of hydro from Nyabarongo) come on board.
EWSA proposed a tariff increase of 30% which would bring the tariff up to the level that would
be cost reflective from 2015. However, only 20% (Frw132-158 Frw) of the increase was effected
by RURA in order to protect consumers from too significant a price increase, bringing the new
tariffs to those illustrated below:
4 In the financial year 2011/12 EWSA received a government subsidy of 20.9Bn RWF, or 43% of the
company’s Electricity revenue
Figure 3 EWSA's decreasing cost to serve
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Table 3: New Time of Use (ToU) Tariff structure
Previous Tariff
Tariff from August 2012
Base with VAT Base with Vat
Average Tariff 110 129.8 132.00 155.76
Flat Tariffs
Domestic 112 132.16 134.40 158.59
Industrial 105 123.9 126.00 148.68
Time of Use
Low 80 94.4 96.00 113.28
High 140 165.2 168.00 198.24
Time of use tariff: As mentioned earlier in this chapter, the level of electricity usage varies
throughout the day. As we only have a limited amount of non-diesel generation (currently
around 60 MW) we are required to use diesel generation once consumption rises above this
level. These hours of peak consumption are in the early evenings, principally driven by domestic
demand for lighting and appliances. To reduce on the amount of Diesel, users are advised to
resort to RURA approved time-of-day tariff, aimed at encouraging the industrial and
commercial consumers to shift their electricity use to off peak periods.
Introduction of Feed in Tariffs: A Renewable Energy Feed In tariff (REFIT) scheme for
hydropower up to 10 MW was conducted by EWSA in close collaboration with RURA and
approved on the 9th February 2012. This is a significant step towards attracting private sector
investment. The existence of a standardised tariff leads to increased investor certainty and
removes the need to negotiate each contract on an individual basis.
2.3.3.2 Developments in regional trade
The Eastern Africa Power Pool (EAPP) is a relatively new institution that was formally
established in February 2005 by the seven countries who signed the Inter-governmental
Memorandum of Understanding. These countries included: Burundi, DRC, Egypt, Ethiopia,
Kenya, Rwanda, and Sudan. Tanzania joined the pool in 2010 and Libya in 2011 bringing the
number to 9 countries. Potential future members include Djibouti, Eritrea, Somalia and
Uganda. The aim of the EAPP is to foster coordinated power development by promoting
synergies among the region’s electricity utilities and therefore, optimize investments and
resource allocation. Presently, EAPP is in the process of building its technical and regulatory
capacity. A number of development partners (World Bank, AfDB, the European Union, the
Norwegian Government, and USAID) are providing support in the design of the power system
and control centre, harmonization of standards, preparation of grid codes and market rules.
20
There are also a number of power interconnection projects between EAPP countries that are at
different stages of implementation.
Several interconnections have already been implemented including a 296.5 km double-circuit
230 kV transmission link between Bahir Dar substation in Ethiopia and the Sudan border and a
155 km double-circuit 230 kV link from the Sudan-Ethiopia border to Gedaref Substation in
Sudan. The power export line from Ethiopia to Sudan is constructed on the basis of a three-year
Power-Purchase Agreement (PPA) under which an annual firm supply of 100 MW would be
purchased. Ethiopia has a large hydropower potential and has surplus power to export. The
nation could however benefit from imports of thermal power from Sudan to manage seasonal
variations in domestic generation.
Rwanda is a member of the Nile Basin Initiative (NBI) and the EAPP. However, apart from using
its share of regional hydro plants - SINELAC and Rusizi I (SNEL), we are not connected to any
regional transmission network. This limits the prospects for larger scale trade as our system
expands and as development of domestic resources may provide additional capacity that can
be profitably exported to the neighbouring countries. Expansion of cross-border
interconnections could be of significant benefit to Rwanda. Interconnectors could enable
import of power from Uganda or Tanzania that could provide a valuable source of power for
peak and mid-load while also providing an avenue for export of electricity from base-load
generation. The benefits of each interconnection fall into two categories:
i) Capacity saving benefits: Capacity saving benefits result from the possibility that the
interconnection allows Rwanda to share reserve margin with another country and to
take advantage of the diversity of demand between the two power systems
ii) Energy exchange benefits: Energy exchange benefits are based on electricity exchanges
during the peak and off-peak generation of both systems. The present
interconnection capacity of 30 MW with DRC and Burundi has served Rwanda’s
needs in the critical periods of the past shortages. The EAPP’s Master Plan has
designated the transmission interconnections among Ethiopia, Kenya, Tanzania,
Uganda and Rwanda as priorities for the development of the Eastern Africa power
market. These interconnections will create the transmission backbone for the
region.
The governments of Rwanda and Uganda recently reached an agreement with AfDB and Japan
(JICA), as part of the Nile Equatorial Lakes Subsidiary Action Plan (NELSAP), to develop the
Mbarara (Uganda)–Birembo (Rwanda) 220 kV transmission line. The line will be designed for
220 kV for a possible export/import capacity of 200 MW. However, it will initially be operational
21
at 110 kV with an interchange capacity of 20 MW. This 172 km line would form part of EAPP
and permit the countries in the region to trade power and reap benefits from the development
of the most competitive power generation candidates in the region. The project is estimated to
cost approximately US$56 million and is expected to be completed by 2015. The long-term
vision is that Rwanda will become an active electricity trading partner to the regional grids;
exporting electricity to the network while also importing power when cheaper supplies can be
secured from sources like hydro plants in the Lower Kafue Gorge of Zambia (to be imported via
Tanzania), and hydro plants in Ethiopia (to be imported via Kenya and Uganda).
International experience has shown that the establishment of wholesale trading arrangements
to facilitate full cross border trade can take considerable time and in the short to medium term
trade is likely to take place utility to utility. This gives light to come up with important
considerations which are detailed below along with their implications:
i) The ability to export power will be driven by whether we can provide electricity more
reliably and at cheaper cost than other countries in the region. Constructing surplus
generation for the export market therefore represents a considerable risk and if we are
unable to find a market the costs of this additional generation capacity will fall on the
Rwandan energy consumer. We will therefore undertake generation investment in line
with demand unless we can demonstrate that a market will exist for our electricity.
ii) As the trading arrangements transition towards wholesale trades, there will be need to
disaggregate costs clearly for use of our network to facilitate wheeling of power through
our country (for example from the Uganda interconnector into the DRC). We therefore
need to clearly split EWSA’s accounts into separate business units. See details on
EWSA’s credit worthiness in chapter 3.
The Eastern Africa Power Pool will offer a platform for implementation of regional projects under EAPMP, managing operations and transactions of power systems, EACPP market structure to manage long and short term transactions, managing an open access transmission system as well as undertaking regional power system planning. There are ongoing projects within the EAC that are building cross border interconnectivities. This will facilitate regional energy trade. These are numerous and discussed in the transmission section of this report, (chapter 3 – especially list of connection projects in figure 12).
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2.3.4 Challenges within the Electricity sub-sector and proposed solutions
Table 4: List of challenges and proposed sollutions
Challenge 1: Lack of intergrated sector planning and required financing: The levels of finance
required for the development of energy infrastructure is significant and cannot be funded
through government reserves alone. There is need for more private sector involvement in
offering financing and even undertaking actual investment in return for a long term revenue
stream
Proposed Solution: In order to undertake this investment efficiently a clear investment
roadmap is required. Such a roadmap has been developed across generation, transmission and
electrification. In summary, a long a clear investment roadmap, government plans to undertake
initial investments to derisk potential projects in which the private investors will invest. The
approach to attracting private sector investment is discussed at length in chapter 3.
Challenge 2: Ensuring financial sustainability of network investments: The average annual cost
of each connected consumer is around $50 (around $45 in financing the loan required for the
connection and $5 for operations and maintenance). Under the current tariff structure, a
consumer would need to use approximately 130kWh per month in order to fund the cost of
their own connection. If they consume less than this, their connection will have to be subsidised
by other electricity users through a tariff increase, government subsidies or both. The table
below illustrates the current consumption patterns across all of EWSA’s consumers. As you can
see, currently around half of consumers are using less than 20KWh per month.
Table 5: Current Electricity consumption patterns
Proposed solution: If we are to achieve the levels of economic growth required , there will be
need to realise a significant increase in industrial and commercial use of electricity. We consider
it will be possible for these new medium and large users to consume enough electricity to
offset any short-term negative financial impacts, experienced as a result of the new conectees
via the EARP programme. International experience has shown that as the country develops
economically, household consumption will increase and this issue will become less acute.
Consumption per month (KWh)
0 to 5 18.4%
6 to 20 31.2%
21 to 50 26.1%
51 to 150 17.3%
151 and greater 7.0%
23
Challenge 3: Ensuring financial sustainability of the generation investment: Approximately
80% of the tariff is the cost of generating electricity. Of this, the majority of the costs are fixed(
paid regardless of consumption). Simplistically, these costs are divided amongst each unit (Kwh)
of electricity sold. If the generation capacity and demand are kept aligned, we can maintain an
efficient tariff. If demand fails to keep pace with increased generation capacity, then the tariff
will increase.
It is worth noting that there must always be a reserve margin(surplus of generation capacity
above maximum demand). Generation cannot run all of the time and at any moment it is likely
that some of our generation capacity will be unavailable, either through a planned outage for
maintenance or for other reasons (shortage of fuel, technical error). Following principles of
international best practice, the plan is to keep around 15% – 20% as . The exact reserve margin
will also depend on the level of uncertainty over demand and the nature of our generation plan
(more reliable plant would require a lower reserve margin). For these reasons it is likely that we
will require a reserve margin at the high-end of this range; the exact margin is a technical
decision which is best left for EWSA who will be monitoring Rwanda’s daily demand curves.
Proposed solution: This challenge will be addressed in three ways:
Enhancing EWSA’s planning capabilities: A master planning unit will be established in EWSA.
The master planning unit will be responsible for ensuring investment is coordinated and
undertaken at the most efficient time, considering national and international aspects. EWSA,
through this unit will have an obligation to report to MININFRA annually on the following:
A. Projected Demand: As illustrated above, a detailed understanding of electricity demand
is vital if we are to invest efficiently and maintain a tariff that is regionally competitive.
EWSA’s master planning unit will be required to undertake a full consultative demand
forecast, engaging governmental and non-governmental stakeholders such as Ministries
and large energy users, to build up a detailed picture of projected demand over the
coming 10 years. Such a demand projection will drive economic and timely investment
decisions.
B. Security of Supply: Security of supply(ability to maintain a reliable, consistently priced,
supply of electricity) is vital to attract and maintain investment in the country. There are
a number of factors that can impact our ability to maintain security of supply, most
notably the margin between generation capacity and energy demand. There are other
contributory factors too such as the age and condition of generation and network
assets, and the reliability of the inputs into our generation plant. Such inputs could be
24
affected by the global economy (Diesel prices), climatic conditions (Hydro power
reserves) or the political climate within the region (the level of investment we can
attract). In conjunction with the Demand forecast, EWSA should have a responsibility to
report on security of supply over a 10-year horizon; this information will also drive
investment decisions and possible government interventions.
Government measures to stimulate demand: There is a strong correlation between the use of
energy and economic development, as illustrated over the page:
Figure 4: Correlation between energy consumption and development
Energy drives economic growth by increasing productivity and freeing the population from
manual work that also jeopardises health and detracts from education. A concerted effort is
required across government to increase demand for electricity. Such a programme, if
undertaken in parallel with the development of our electricity investment roadmap, would help
to drive economic development and reduce the average cost of electricity which would act as
an accelerant to development by producing an environment that will promote the
establishment of businesses.
Challenge 4: Capacity to deliver the electricity infrastructure: Project development, monitoring
and implementation require skilled and experienced managers to ensure efficient coordination.
There is strong need to hire and retain enough qualified staff to monitor energy projects and
engage in strategic investment negotiations.
Proposed Solution: Government has instituted a specialised Investment Unit under EWSA to
Rwanda
25
oversee energy investments and negotiate on behalf of government to avoid government
landing on bad deals. Capacity of national staff to lobby and negotiate for efficient
implementation of regional projects with the EAC Secretariat should be strengthened. Previous
EAC-funded projects have been slow in their implementation and so, well-functioning regional
projects will help achieve national energy targets.
26
Challenge 5: Minimising system losses: A loss in energy between generation and consumption
is an inherent feature of electricity networks and such losses cannot be totally eradicated. They
can however, with thorough network planning and maintenance and best practice billing be
reduced. We are currently experiencing losses of around 20%, of which the majority occur
through heat losses in the distribution network.
Proposed Solution: A consultancy is undertaking a detailed analysis of our system and will
report back with proposals at the end of 2012 on measures to reduce system losses, on the
basis of which a a clear loss reduction plan will be developed. It is worth noting that reducing
losses requires capital expenditure and there will be a trade-off between the capital cost of loss
reduction and the operational costs we save. The chart below indicates EWSA’s current view on
what will be possible to address this challenge;
Figure 5: EWSA's loss reduction plan
27
Challenge 6: Scattered Settlements: A significant driver of the cost of any electrification
programme is the density of the properties that are to be connected. The more scattered the
settlements are, the higher the cost of extending the network between properties. In the
development of the plans for electricity connections, we have considered some level of
resettlement, but this needs to be promoted by the local communities and MINALOC in
particular.
Proposed Solution: The proposed solution to this, is implementing the the current settlement
policy to bring households in close proximity-in what is called the “Imidugudu” settlement
schemes. The Ministry of Local government with the mandate of designing and implementing
policy on habitat will be asked to speed up the umudugudisation program country over to keep
pace with the rollout program if we are to reduce the connection bill to build Medium Voltage
(MV) and Low Voltage (LV) lines and connecting new households.
On average, MINALOC committed to increase the number of households relocated to organised
settlements from 1.3 million households already relocated to a total of 1.9 million households
to be relocated to imidugudu settlement areas by 2018. Further detail on the proposed
approach to the EARP can be found in chapter 3 in this document.
2.4 Petroleum subsector
The Petroleum subsector is vital if government is to achieve required levels of growth over the
coming 5-years. Due to Rwanda’s geographical location and the fact that we have no proven /
commercially developed reserves, the economy depends entirely on imports to satisfy the
country’s need for petroleum products such as diesel, petrol, oil, kerosene and natural gas.
The price of petroleum imports is a significant driver of the price of other goods and services
produced with a bearing on Rwanda’s regional and global competitiveness, levels of inflation
and consequently ability to meet GDP and poverty reduction targets. Additionally the
international market for petroleum products tends to be extremely volatile and government
will ensure safeguards to protect the economy from this volatility.
The demand for petroleum products is forecast to grow at an average of 10% each year
between now and 2020. The cost of procurement has an important macro-economic impact. At
present, oil products account for 25% of import costs and the proportion of export revenues
spent on oil products is even higher at around 55%.
28
As illustrated in the table below, diesel and Petrol are the dominant petroleum product
imports-Diesel being mainly used in the generation of Electricity whilst petroleum products are
used in transport. Table 6: Petroleum products importation (Litres) – 2011/12
Product Annual consumptions (litres)
Petrol 82,263,817
Diesel 121,937,405
ILLUMINATING KEROSENE 15,222,724
HEAVY FUEL OILS 33,666,910
JET A-1 12,454,649
TOTAL 265,545,505
Source: MINICOM(Downstream Petroleum Policy, 2012)
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Whilst we expect demand to grow at around 10%-15% per annum, this will not be evenly
distributed:
1. The volume of Diesel import is expected to fall following government plan to transition
away from Diesel to other lower cost, indigenous forms of generation. EWSA projects
the level of expenditure on Diesel generation to drop from around $64m from 2012 to
$31m in 2013 and $6.8m in 2014.
2. The consumption of aviation fuel is expected to grow at a significantly higher rate as
Rwanda is positioned to be a preferred hub for air transportation in the region5.
The table below illustrates current expectation on the growth of petroleum products over the
coming years.
Table 7: Petroleum products usage projections
Annual consumption (000’s litres) 2010 2012 2015 2017 2020
Petrol, diesel, kerosene &fuel oil 205,908 258,291 362,880 455,197 639,519
Jet fuel 13,000 17 ,000 27,000 35,112 53,401
Source MINICOM (Downstream policy, 2012)
2.4.1 Recent Developments in petroleum sub-Sector
Upstream
Preliminary Exploration work: The Government of Rwanda signed a Technical
Evaluation Agreement to conduct preliminary exploration on Lake Kivu and a
management prescription developed outlining best practice for sustainable extraction of
Rwanda’s Methane gas resources.
Development of the Legal and Regulatory Framework: A draft policy and strategy have
been developed for the upstream petroleum sector with the intention to “Promote and
accelerate petroleum exploration in Rwanda to achieve commercial discovery of
petroleum resources”. Details for the developments under the upstream side of
petroleum subsector are highlighted in detail in the Environment and natural
resources(ENRA) Sector strategic plan. An upstream petroleum strategy, policy and gas
law are currently pending approval by cabinet.
Petroleum sharing agreement on Lake Kivu: Negotiations are underway on a sharing
agreement to Lake Kivu’s resources between the governments of Rwanda and the DRC.
5 Achieving this is heavily dependent upon our ability to secure cost effective reliable imports of aviation fuel; see section XX00
30
Downstream
Regulations: In line with their role to regulate infrastructure within the Petroleum
sector, RURA has recently approved regulations relating to the storage and transit of
LPG (the LPG regulations) and Petrol station Facilities.
Downstream petroleum policy developed: In July 2012, downstream petroleum policy
and strategy were presented to Cabinet. The purpose of the policy was to lay the policy
framework through which Rwanda can “achieve cost-effective, affordable and high-
quality petroleum products”. The policy is currently before cabinet awaiting approval.
The key components of this strategy are presented in detail in the next chapter
2.4.2 Challenges and proposed solutions
The table below presents the key challenges within the sector, the proposed solutions and the
individual activities to make these solutions a reality. The following chapter 3 presents these
solutions in greater detail, including respective roadmap and costing.
Table 8: key challenges in the petroleum sub sector
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Summary of Key Challenges
The petroleum sector is characterized by three main challenges. The government approach to
address each of these challenges is summarised below and in great detail in chapter 3 of this
document.
1. Volatile prices: Rwanda’s economy, as already discussed relies entirely on imported
petroleum products and is often a victim of supply side interuptions. The supply
disruptions following the 2007 Kenyan post-election crisis led to a significant spike in the
price of petroleum products and a requirement for government subsidies at the expense
of sacrificing other development spending.
2. High Costs of petroleum products: A combination of Rwanda’s geographic location and
the long and costly supply chain for petroleum imports as well as the fragmented nature
of petroleum products purchasing (There are over 20 oil marketing companies many
importing products individually) makes the cost of petroleum products within the
country significantly higher than the regional and international average.
3. Uncertain product quality: Lack of clear standards and quality control mechanisms and
capacities means that the quality of petroleum products imported and used within the
country can be compromisied. This has negative impacts of fuel efficiency.
The table below summarises some of the proposed solutions to the above challenges facing
downstream petroleum industry;
Table 9: Proposed Solutions to Key challenges facing downstream petroleum sub-sector
Development of
alternative supply
routes
Petroleum products are normally imported via the ‘Northern Corridor’ route
(pipeline to Eldoret, then road tanker through Uganda and then into Rwanda).
Transporting liquid fuels by land is expensive and government is studying
new, lower cost supply routes. Additionally our reliance on one main
transport route exposes the country to significant risk of an interruption in
supply. Government is currently considering two approaches to address this
problem:
Isaka / Kigali Railway route
Eldoret / Kampala / Kigali Pipeline route
Bulk purchasing
capability to address
issues of high fuel
prices
Purchasing petroleum products in bulk can realize significant savings through
economies of scale and the benefits of bulk purchasing power. The
fragmented nature of our petroleum market means such an effort will require
coordination. Such arrangements already exist in Kenya and Tanzania and
government commits to investigate the potential to establish synergies with
32
these schemes or develop local but similar arrangements.
Increase Strategic
reserves
Strategic reserves will be kept to preserve security of supply and help
militate against price shocks. Further, in order to allow government to realize
the bulk purchasing efficiencies described above, there is need to increase
fuel storage levels and strategic reserve capacities. Government plans to
increase fuel storage facilities to accommodate 5-month’s consumption
equivalent by 2017. out of the 5 government plans to request on the private
sector suppliers to store 1-month’s supply whilst the government will
purchase 3-months consumption equivalent in reserve.
Enforce price
stability and a
coherent
downstream
regulatory
framework
Govermment proposes to develop a robust fuel pricing methodology that will
in tandem with increased fuel strategic reserve, help to address the issues of
price volatility and create an environment more conducive to foreign
investment.
Develop safe and
efficient domestic
supply chain
As said herein this document, imports of petroleum products especially jet
fuel are expcted to increase significantly. As this happens, there will be need
to ensure that Rwanda’s workforce is equipped to appropriately handle
these products. NICA will take the lead in undertaking coordinated training
and education program to develop capacity of handling and distributing oil
products.
Develop and enforce
clear product
standards
To increase investor confidence in using petroleum products in Rwanda and to
protect the citizens from susbstandard products, RBS and NICA will be
responsible for setting and enforcing petroleum product standards.
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2.5 Biomass energy subsector
Biomass resources are exploited in form of firewood, charcoal or agricultural residues mainly for cooking purposes by Rwandan households and also in some industries (MININFRA 2008a). In the rural areas, biomass meets up to 94 per cent of national needs; with the balance being met by other options such as kerosene, diesel, dry cells, grid and non-grid electricity, biogas, solar,wind and other renewable energies. Biomass is already in short supply with the country facing a biomass deficit of over 4 million m3 per year(BEST Strategy, 2009). In Rwanda, biomass energy subsector covers mainly wood, charcoal, biogas and biofuels. Although fuel wood consumption is expected to increase in the short-term, the long-term strategy of the EDPRS II is to reduce fuel wood consumption from 94% to 50%. Rwandan households may not eliminate use of woodfuels in the very shortrun. The use of wood
fuels is expected to be suppressed progressively with the introduction of enabling frameworks
for use of LPG and other alternatives including solar and thermal applications.
The overarching objective of the Biomass sector is to promote environmentally sustainable use
of biomass fuels, thereby mitigating social and health impacts. This will be achieved through the
following 2-ways:
1) Transitioning away from more rudimentary forms of biomass such as wood to improved
charcoal and biogas as well as alternatives such as LPG or Peat.
2) Increasing the efficiency and sustainability of Biomass solutions. This will be arrived at
through improved charcoaling technologies and improved cookstoves. Production
improvements will be done through a revised approach to wood harvesting and
utilisation.
2.5.1 Recent Developments within the Sector
2.5.1.1 Biomass fuels and improved cooking technologies
Currently, the average household uses around 1.8 tonnes of firewood in a year to satisfy its
cooking needs with a traditional stove. Whilst it must be noted that there are significant health
and social benefits of transitioning to charcoal, it is likely to increase the pressure on the limited
wood supplies. This issue is likely to be accelerated as more and more people move from rural
to peri-urban environments where use of charcoal is more common.
To combat this, one of the approaches used by Government is to focus on increased wood
production (over 80% of the country‘s firewood and charcoal currently comes from eucalyptus
trees through artificial plantations and agro forestry programs).
34
Charcoal is the preferred fuel for urban households and demand is pushing up the price. In 2003 only, the charcoal market had a turnover of US $30 million (World Bank 2006). The current trend towards increased urbanization and the declining state of forest resources points to the need to design effective policies to address some of the pressing challenges in the biomass subsector and the entire energy sector. The Government has put in place very strict tree harvesting regulations and only licensed
persons with tree harvesting permits are allowed to cut trees, including those from private
lands. These measures have helped to reduce deforestation and establish Rwanda as only one
of a handful of countries on the continent where the relationship between charcoal and
deforestation no longer exists.
2.5.1.2 Biogas Programmes
There are two distinct programmes under the biogas program:
1. Domestic Biogas program. The National Domestic Biogas Programme started in 2007
was targeted at generating useful Biogas from the waste produced by a mixture of
animal dung and urine. The initial focus of the programme has been on capacity
development, training of technicians and entrepreneurs, awareness campaigns and
promotion. As a result, by September 2012 over 2700 biogas digesters had been
constructed, over 200 masons trained and approximately 40 companies were actively
involved in the programme. The government is in the process of facilitating installation
of atleast 100,000 additional domestic Biogas digesters by 2017/18.
2. Institutional Biogas program: The Government in 2008 announced a policy to introduce
biogas digesters in all boarding schools (estimated at around 600 schools), large health
centres and institutions with canteens to reduce the consumption of firewood. Futher,
through this program, 11 out of the 14 prisons in Rwanda are currently using biogas for
cooking. To-date, altogether, around 70 large biogas digesters have been constructed in
several institutions in Rwanda. The biogas systems installed in the schools and prisons
have reduced firewood consumption by close to 60% and 40% respectively, along with
significantly improved hygienic conditions and revenue savings.
35
2.5.1.3 Biofuels Programs
The Institute of Scientific and Technological Research (IRST) drafted a policy in 2008 to promote bio-diesel exploration, production and use of in Rwanda. This came following a country study conducted by IRST on bio-diesel production that revealed its viability in Rwanda.
Biofuel is an alternative fuel to conventional petroleum-based diesel engine fuel, which is
manufactured from vegetable oils or animal fats by catalytically reacting these with a short-
chain aliphatic alcohol (methanol or ethanol), through a process called transesterification, or
alcoholysis. As mentioned earlier, Biofuels could significantly reduce Rwanda’s dependency on
imported petroleum products by replacing fuels(Especially transport fuels), with fuel produced
from domestically harvested crops. Bio crops (required to generate Biofuels) do however
require significant areas of land in order to produce any significant level of output. with the
challenge of land shortages, government will need to assess the trade-off between Bio crops
and crops for food production.
One of the proposals to address the conflict between land for agriculture and planning of
biocrops is to plant Bio crops on so called “marginal land” (land that is proven not suitable for
food production). In 2009, an agreement was signed between Rwandan government and a
private developer to establish a Jatropha-to-Bio Diesel harvesting and production facility on
10,000Ha of land, the majority of which is classified as marginal or non-farmable land.
36
2.5.2 Challenges and proposed solutions
The figure below outlines key issues faced in the biofuels subsector, summary of proposed
solutions and key steps required to deliver these solutions. Figure 6: Key challenges faced by the biomass subsector and high level solutions
Table 10: Proposed Solutions to Key challenges in the Biomass sub-sector
Proposed solution Description
Transition away
from traditional
biomass
Use of alternate Fuels: There are a number of alternative fuels to Biomass,
unfortunately all of them are currently more expensive and require significant
capital investment. Biogas program is currently implemented as a suitable fuel
for cooking.
LPG and Kerosene are both potential alternatives, as well as peat pellets that can
be used in cooking. Given their current prices, government needs a strong
downstream strategy of ensuring their affordability to the end users through
keeping strategic reserves of Kerosene to allow price stabilization interventions.
Further work is required to assess the technical and financial feasibility of LPG
and peat as suitable cooking fuels.
Accelerated delivery
plans
Biomass schemes are by nature small scale local activities. Reliance on MININFRA
or EWSA for continual approval and financing will slow down delivery. The
current proposal is to decentralize decision making powers to the district level to
accelerate delivery
37
Identify additional
wood resources
Whilst Rwanda has had great success in licensing the use of wood, there is still
great need and potential to develop more artificial forests such as ucalyptus to
gurantee wood supply. Government intends to undertake an audit of the
available land from where more wood trees can be planted.
High yielding trees such as eucalyptus will be planted in areas that do not
compete with other productive uses of land to provide future wood fuel and
charcoal required for cooking. MINIRENA plans to increase forest cover to 30% of
the total land area by 2017 through plantation of more trees to help manage the
potential impacts of fuel related forest harvesting on the environment. As a
matter of policy, every household in urban area will be expected to plant at least
10 trees while rural households are expected to plant at least 5 trees per annum.
Develop business
models for
dissemination of
biogas technologies
During the dissemination of the Biogas Digestors around 70 companies have
been registered with varying levels of success. 25% of the companies have been
responsible for installing 60% of the bio-Digestors. Government will learn lessons
from these business which will accelerate economical program dissemination.
Reduce the cost of
Biogas Digestors
MININFRA through the National Joint Taskforce is studying different biogas
models to arrive at an appropriate technology at a reduced cost. The taskforce is
assigned to examine how the actual cost of digestors can be reduced through
alternate technologies and other cost cutting measures such as voluntary works
on unskilled labor requirements. The team is also studying possibilities of
constructing shared digesters where about 4 households can be fed with one
installed digester. All this is intended to make the technology more affordable to
majority of the population
Promote
descentralised
delivery
As outlined above, these products are very much of local solutions and the
current approach intends to promote close working with district authrorities to
deliver the technologies. Some of the areas of district intervention include;
education and mass awareness, capacity building and monitoring and evaluation.
District authorities will be required to incorporate delivery of alternative energy
including biogas into their annual performance contracts and this promotes more
ownership.
Accelerate the
dissemination of
improved cook-
stoves
The GoR through EWSA is targeting to ensure that 80% of households have
access to improved cookstoves by 2017 and 100% of households by 2020. The
program was projected to cost around $0.25m in the financial year 2012/2013.
Clean Development Mechanism. To beef up program financing, government
plans to leverage carbon finance as much as possible to provide additional
financing required. This will encourage project developers to register their
projects for the UN Clean Development Mechanism (CDM) to attract revenue
and sustain their project financing requirements. Due to the administrative
overhead, this is not likely to be possible for small producers but MININFRA will
encourage this to be done on a collective basis.
38
3 Strategic Framework
Chapter outline
This chapter outlines the specifics of what is planned to be done under EDPRS II. The chapter
briefly discusses some lessons learnt from EDPRS I, followed by detailed discussion of strategic
approaches to deliver on the sector commiments. The chapter concludes with an overview of
how our plans will drive key thematic areas of EDPRS II and how it interrelates with cross
cutting areas such as Regional Integration and Gender mainstreaming.
3.1 Mission and objectives of the energy sector
Mission: The mission for the energy sector is to create conditions for the provision of safe,
reliable, efficient, and cost-effective energy services to households and to all economic sectors
on a sustainable basis.
Specific objectives:
Increasing Electricity Generation Capacity
Increasing Access to electricity
Maintaining an economic and regionally competitive tariff
Sustainable and efficient use of Biomass
Maintaining an economic and secure supply of petroleum products at predictable prices
3.2 Energy sector contribution to EDPRS II
3.2.1 Lessons leant from the EDPRS I
a. A clear plan to attract private investments: Whilst there has been notable potential
investment successes in recent years, significant time and resources have been lost by
passively reacting to expressions of interest from investors. This approach has led to
government being dragged into unplanned negotiations, often without key inputs such
as feasibility studies or an understanding of the role a particular technology will play in
our generation mix. Government is planning to proactive investor engagement on terms
that guarantee positive returns on investment. The government will often undertake
ground work in advance of progressing to negotiation, and wherever possible call for
competititve bids to realise value for money. Details on private investor engagement are
discussed in detail in this chapter.
39
b. Decentralized implementation: Implementation all energy projects was previously
Centralized. Implementation of the biomass programs for instance was previously done
at sector level that lacks direct touch with the end users. At times, lack of proper
coordination led to duplication of efforts by doing what at times could have been
committed by the local governments in their performance contracts. As an example,
dissemination of biogas digesters and cooking stoves was done by the central
government and these yields less that desired results. The current proposal is to
decentralise implementation of biomass programs to the local government levels to
improve the impact to the end users.
3.3 Key projects to meet EDPRS II targets
As outlined at the start of this document, a number of approaches have been proposed to
deliver on the energy sector plan, borrowing lessons from past successes. As an example, we
propose to continue the electrification exercise through extending the current EARP
programme confident of its remarkable success. The proposed strategies are outlined in the
illustration below and discussed in detail later in this chapter.
Figure 7: Objectives, goals and strategies to achieve EDPRS targets
Before discussing each of these approaches in detail, the illustration below presents a summary
of government key priority policy actions and their respective delivery timelines.
40
Figure 8 Key policy priorities
41
3.3.1 EARP program and off-grid solutions
The first half of the year 2012 marked the end of the first phase of EARP. The second phase of
the development and poverty reduction strategy known as EARP II will cover the period 2012–
2017. Government is determined to build on the success of the first phase and where
appropriate learn lessons that can help us deliver on the challenging 48% electrification target
over the coming 5-years. It is currently not economic to connect all of these households to the
grid irrespective of the location and level of income. The EARP programme will be “wiring up
the country” to ensure a network exists to connect the population on demand. In a number of
cases, households will need to move closer to the grid if they are to access a connection. Such
movement will happen as a result of the new settlement policy and further encouraged
through Rwanda’s urbanisation policy.
For the households that are too far away(atleast 5 metres) away from the grid network and
those without capacity to afford grid connection, grid connection is proven to be uneconomic.
such households will access electicity through either off-grid solar installations or mini-
grids(communal based minipower stations). Smaller scale solutions such as off-grid solar and
mini-grids are better suited to private sector investment; however the government must play a
role in allowing these private markets to flourish.
3.3.1.1 Sequencing and costs of EARP Programme
Based on the latest household survey data, It will be necessary to connect 770,000 additional
households between now and the end of 2017/18 to reach the targeted 48% connection rate.
This presents a considerable technical and financial challenge. At a practical level we propose
that connections can still be undertaken using the current approach to delivery viz;
1. Contractors for Medium Voltage lines
2. Construction teams from EWSA and EARP
3. Contractors for Low voltage and service connection contractors
4. EPC contractors (Engineering, Procurement and Construction).
The EARP will continue to buy all meters in bulk and other components such as lines, posts and
transformers will be bulk purchased for contractors. Engineering, Procurement and
Construction (EPC) contractors will be responsible for acquiring all components required with
the exception of the meters.
42
To better manage delivery challenges, a large section of delivery responsibilities will be granted
to EPC contractors. EARP will be encouraging local and African and regional suppliers to
participate. The EARP programe consists of two categories of electricity connection:
1. Direct connections: The EARP team have developed a detailed view of where all the
households are currently located and have identified exactly where the network
should be built. Houses reach of this network can be connected as the network is being
built. Such houses would be expected to pay an annual charge for this connection;
whilst the remainder of their cost of connection would be subsidised/publicly funded.
Due to this generous subsidisation policy we have assumed that 75% of households
that could be directly connected will be. This equates to 400,000 households, which in
addition to the 360,000 connections projected for the end of EDPRS I would equate to
760,000 households or 33% of the country by 2017/18. The cost of this initial network
development is $408m or just over $1,000 per connection.
2. Relocation and Fill-ins: Once the network has been extended into an area and the
assumed 75% of households within immediate reach of the network connected we
expect a significant volume of additional network connection requests coming from
either the 25% of households who did not connect when the network was initially
being built out or people relocating to be closer to the electricity network and other
infrastructure, driven by policies such as urbanisation and resettlement. Given that the
network will already exist, the cost of these connections will be substantially less than
the direct connections. The average cost of these connections is expected to be around
$470. Based on an assesement of relcation plans and the number of consumers for
whom a connection would make economic sense we expect around 340,000 additional
houses to connect in this manner, bringing our total number of connections up to 1.1m
or 48% of the population.
Note: It must be noted that achieving this target will depend to a significant degree on the
success of the urbanisation and relocation policies.
Subsidies and Customer Contributions: Currently, a customer is expected to make a direct
contribution of around $100 to the cost of their connection, repayable in monthly instalments
over a period of ≈ 10 years. The rest is funded through a combination of DPs grants, loans from
development banks and government contributions. The loans are ultimately repaid by EWSA,
and funded through the electricity bill. The impact having to repay capita costs on the National
Energy tariff is discussed at length in chapter 2 under financial sustainability. such users are
unlikely to consume enough power to make their connections financially sustainable for some
time. Of equal importance however is the government/ EWSA’s ability to raise required capital.
43
In light of this, it becomes clear that financing is required even for the customer contributions
since these will be paid off by the consumer over a period of time. Any increase or decrease in
the level of customer contribution will increase / decrease the direct link between a consumers
capital costs and the charges they face but will not impact the amount of finance we need to
raise.
A policy action in the first year of EDPRS II will be to review the levels of customer contribution
that different people are paying. It may be possible to set the level of contribution in line with a
customer’s income. This is a balancing act:
- If we set the contribution too low; there is no barrier to connection and we risk people
connecting who use little to no electricity, driving up the average tariff.
- If we set the contribution too high; our poor will not be able to connect which could
limit economic development and the rate of poverty reduction.
Tariff Segmentation: One approach to making electricity more affordable to the newly
connected is to establish a “progressive tariff” ie a tariff structure where the poor pay less per
unit of electricity than the wealthy. Under such an approach those with the highest
consumption cross subsidise those with a lower consumption. The way out to do this is to
adopt a ‘lifeline tariff’, where by all consumers would get a basic number of KWh per month at
a reduced price which would be cross subsidised through the tariff levied on consumption
above this limit. As with any change to customer contributions, we need to consider the impact
any increase in the tariff for high consumers may have on economic growth. Setting such a
tariff is a complex exercise requiring detailed projections of consumption patterns. We intend
to undertake a review of the existing tariff structure before the end of 2013/14.
3.3.1.2 Off-Grid Solutions
Some rural industry and manufacturing will require reliable and consistent grid electricity if
they are to reap required business returns. It is estimated that in the flour-milling sector, millers
on average loose three days of production a month due to unreliable electricity (PSD 2012).
Such losses in productivity can be addressed through reliable grid electricity offered by EARP.
However, other households may not necessarily require on-grid electricity and as already said,
it may not be of conomic sense for them to connect them to the grid. These users will mainly
use electricity to charge their phones, radios and for lighting. Energy for this purpose can be
provided through solar installations and micro-grids and power from these solutions could be
provided at significantly reduced capital costs, with minimal need for government subsidisation.
44
Solar Installations: Small solar installations can be used to provide sufficient electricity for most
home uses. Such installations are available for an initial cost of between $50 - $200 depending
on the appliances they are required to power, with no need to pay further energy costs. This
technology that can be delivered by the private sector, however, government will be required
to support the industry sharing information and educating the local population. To achieve
government target of universal access to electricity, the target is to facilitate access to solar
instaaltions for about 1.2 million households by 2017. Rwanda will borrow experience
worldwide to design the best possible programme including the following aspects:
1) Education of the population on Energy products available: Government will scale up
mass education of the citizens on the relative costs and advantages/ disadvantages of
off-grid technologies for them to make informed decisions. As outlined above, the grid
network will have been extended across the country by 2017, providing potential
households with the option of grid connectivity.
2) Sustainability: The government is planning to sustainability of this program in the
following key as[ects:
i. Maintenance and support: Whilst minimal maintenance is required for off-grid
solar systems, there is still a requirement for support to be available to ensure
the systems proper system maintenance.
ii. Protection against Obselecence: As Rwanda’s economy grows, energy
consumption will grow and more households will transition onto grid
connections. There is need to design a programme under which this econonomic
growth does not render any investment into these technologies obsolete.
iii. Environmental Sustainability: The production, import and disposal of solar
materials, particulalrly batteries must be done in an environmentally sustainable
manner.
3) Development of local economy: Solar presents an excellent opportunity to develop our
economy at a local level through employment of technicians to install and maintain
equipment right up to the macro where Rwanda could build on our ease of doing
business to become a hub for the development and distribution of products throughout
the region.
4) Information sharing between EARP and the private sector: The biggest market and the
for solar installations will exist in areas which will not be connected to the network for
some time. The EARP needs to share its connection plans with the suppliers of solar
systems for them to make informed investment decisions.
45
5) Access to Finance: Unlike the EARP programme where finance is being obtained by the
government and EWSA, finance for solar home installations will need to be sought
individually. The microfinance market is growing significantly at present but government
must play a role in ensuring appropriate financial products are available.
6) Regulations and Taxation: Whilst direct subsidisation to the industry is unlikely to be
required, the government must play a role in ensuring conducive legal and regulatory
environment supporting the industry to develop.
Solar in schools: One of the off-grid solar energy solutions is the IREARPPP project
designed to connect 300 schools in distant areas of Rwanda. The project is currently
over 50% progress with over 150 schools out of the 300 successfully connected with
solar systems.
Off-grid hydro projects: Plans are underway to develop more mini and PICO hydro power
projects to generate electricity to communities located in isolated areas away from the national
grid. Proposed off-grid micro hydros include Nyirabuhombohombo (0.5MW) and others that
will be connected with time. However, this should be in areas that are economically costly to be
connected to the national grid. Local investors will be encouraged in these small hydro power
projects as a way of developing local capacity to exploit Rwanda’s energy resources.
A clear policy on the implementation and management of the off grid solutions will be
developed. The policy should give clear guidance on the development of these resources, as
well as monitoring and financing mechanism of the power projects not connected to the grid.
46
3.3.2 Understanding Electricity Demand
As discussed in Chapter 2 it is vital that investments in Electricity infrastructure are in line with
demand if we are to strike the right balance between maintaining a reliable supply of electricity
and realising a tariff low enough to drive economic development and poverty reduction.
Demand can be measured in absolute terms( total volume of energy consumed in a given year
in KWh) and peak demand as the maximum consumption at any point in time during a given
period (in this case a calendar year), as illustrated in the graphic below: Figure 9 Peak vs Absolute Demand
Peak demand will dictate how much generation capacity needs to be developed. The shape of
the demand curve dictates what type of generation should be installed and how much this will
be used. This is discussed in greater detail in the next chapter on the Electricity Roadmap.
In deriving our peak demand for electricity, 4 major components of demand will be considered:
1) Residential Demand – A function of the number of households connected to the grid
and the level of consumption at a household level. Households tend to consume most of
their energy at peak times (around 18:00 – 19:00), so residential demand is a significant
driver of peak demand.
2) Industrial and commercial Demand – This covers all non-residential demand and the
significant contributors to this will be the mining, manufacturing and agricultural sectors
along with commercial premises. The coincidence with peak is less than with residential
demand. The current Plans to reduce consumption at peat times include the time of use
tariff.
47
3) Export Demand – As described in chapter 2 significant investment is underway in
infrastructure which will connect Rwanda to our East African trading partners. Rwanda’s
ability to export power will be entirely dependent upon he ability to supply electricity to
neighbouring countries at a favourable tariff compared to their domestic tariff. The
current assessment indicates that significant exports are unlikely given the investment
in cheap hydro being undertaken in the region – particularly in Zambia and Ethiopia. We
propose to undertake a detailed study over the coming year of our export potential but
until such a study is complete will consider export demand to be zero.
4) Losses - A loss in energy between generation and consumption is an inherent feature of
electricity networks and such losses cannot be totally eradicated. As will be discussed
later in this document, current power losses are currently at around 20%. Through
enhanced operational practices, the aim is to reduce these losses to bearable limits over
the coming years.
In addition to meeting peak demand, there is need for sufficient reserve margin on our system
to handle any reduction in generation capacity through planned or unplanned outages of
generation plant or the loss of network connectivity. In line with international best practice, the
reserve power is planned to be between 15-20%. For Rwanda it is likely to be at the high
end(20%) of that range to accommodate the uncertainty associated with potential demand
shocks due to growing economy.
3.3.2.1 Baseline Demand Forecast
By summing up demand from each of the above 4 categories and factoring in the reserve
margin, four generation requirements have been derived as detailed in the table below. The
underlying assumptions used to arrive at the demand forecast are detailed over the page:
Table 11: Demand projections under different scenario (Generation requirements including losses)
Demand scenarios 35% electrification by 2017 48% Electrification by 2017
Likely Demand scenario
Generation required: 300 MW
(Total demand: 250 MW)
357 MW
(Total demand: 298 MW)
Reserve Margin(20%)
Ambitious Demand scenario
503 MW
(Total demand: 419 MW)
563 MW
(Total demand: 470 MW)
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Key assumptions: The assumptions wee built on conservative principles, tending to
overestimate demand. Below are the assumptions used.
Assumptions common to both scenarios to 2017
Industrial
In addition to the levels of growth indicated below, demand will double before 2017 through existing facilities utilizing currently unutilized capacity (Source: MINICOM)
175 Ha of industry will come online through the 4 Industrial zones assuming the zones are 50% occupied (source: MINICOM)
Industrial
(mining)
An additional 40 MW of generation will be required by mines by 2017 (Source: RMIF)
Agricultural Irrigation pumps consuming approx. Additional 40 MW of electricity will connect to the grid by 2017 (source MINAGRI)
Scenario Dependant Assumptions to 2017
Likely Scenario Optimistic Scenario
Residential Average household consumption
will increase marginally above current levels
Average household consumption will triple from current levels
Commercial
(SME)
Electricity demand to grow @ 8% p.a
Electricity demand to grow @ 25% p.a.
Industrial Electricity demand to grow @ 8% p.a.
Electricity demand to grow @ 20% p.a.
Notes:
1) Commercial Demand: In reality the forecast includes a greater increase in Commercial
demand than that stated since a portion of the increase termed “Residential” will also
be small enterprises.
2) Industrial and Mining Demand: The rates of growth in industrial demand are in addition
to the assumptions on doubling of output, industrial zones and mining increase.
3) Residential Demand: Residential demand is a function of average consumption
multiplied by connections. Even for average consumption per connection to remain at
today’s level would be a significant challenge as we continue to connect those less able
to afford to the grid.
3.3.2.2 Continuously refining the forecast
A Demand forecast must be continuously revised in light of new information. Demand is also a
lot more complex than simply projecting peak consumption. In order to plan generation and
network investment appropriately EWSA needs to understand exactly where the demand is
projected to come from. Under the new energy policy, an obligation is placed on EWSA to
project demand and report on security of supply as follows:
1) Demand Projection: EWSA will be responsible for projecting electricity demand over a
20-year horizon. These projections will be updated annually and form the basis of sector
49
planning. All government stakeholders have an obligation to contribute to this process
in an accurate and timely manner.
2) Security of Supply: Rwanda will develop sufficient generation to satisfy domestic
demand and look to diversify our generation mix where possible, maintaining an
appropriate reserve margin. This reserve margin is dependent upon the make-up of the
generation mix, in terms of technology and unit size and will be determined by EWSA.
EWSA will be responsible for producing a report on Security of Supply on an annual
basis.
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3.3.3 Development of a Generation and Transmission roadmap
The level of investment required in electricity infrastructure is significant. As already indicated,
about $570m will be required if we are to achieve our target of connecting 48% of the
population. A sizeable amount of investment will also be required finance generation and the
transmission projects that will determine the capacity to arrive at required levels of acess to
electricity. The investment decisions taken today, particularly in generation, will have an impact
on prices and competitiveness in future. Every MW of generation capacity installed must be
paid for whether consumed or not. This should inform decion making to ensure that investment
in generation is inline with demand.
3.3.3.1 Generation investment
In light of the costs of generation infrastructure, investments will be done in line with Demand.
If all the current pipeline projects are implemented, the installed capacity would be closer to
610 MW by 2017/18, slightly higher than required(563 MW). The justification for this is to
cushion against supply shortfalls due to projects being delayed as a result of technological or
financing issues. Delivery of the 563 MW required by by 2017 /18 will cost around $1.6Bn.
This chapter presents the Generation options available, optimal level of investment required,
timeline of activities, levels of investment required and opinion on government/private
financing mix.
3.3.3.1.1 The generation options available and their impact on the Energy mix
Energy resources available: Rwanda has a range of indigenous resources that complement
each other in the energy mix. The table over the page illustrates how this can be split across the
different generation technologies:
51
Table 12: Overview of Rwanda's indigenous energy resources
Resource
potential
Characteristics and Considerations
Hydropower
400 MW6
Hydropower has generated the bulk of electricity in Rwanda since 1960s. Its overall
potential is estimated at about 400 MW but the current installed hydro capacity is
64.5 MW. As a result of extremely low operational costs however, hydro is still one
of the cheapest forms of generation in the long run.
Geothermal
700 MW7
Rwanda’s geothermal resource is yet to be fully proven, however, studies
undertaken to date, indicate a likelihood to discover a commercially viable resource.
The exact size of the resource is not yet proven. This will only be determined once
drilling completes and once established, the low costs of Geothermal and its high
availability makes it the cheapest form of generation available.
Methane
350 MW8
Pilot projects have demonstrated the commercial and technical viability of extracting
methane from Lake Kivu. Following the completion of KivuWatt 1, this will be further
proven and we can expect increased interest in the resource from private investors.
Peat
700 MW9
There is considerable private sector interest in electricity generation from Rwanda’s
peat resources. Peat is a proven technology and less complicated than methane or
geothermal. The cost of electricity produced from peat will be slightly higher than
that produced from methane due to the costs of peat mining. However, its reduced
complexity means it can deliver increased capacity sooner.
The chart on the left illustrates our daily load curve (the
way demand fluctuates throughout the day) and the role
that different energy sources are expected to fulfil in the
future. All sources of energy are different and have a
different role to perform. Geothermal, Hydro and
Methane, once constructed have very low operating
costs and can run almost constantly so would provide
base-load power. Peat can be operated flexibly to adjust
to meet the evening peaks, whilst solar will only operate
during the day. The table overleaf outlines the full list of
projects through which we could deliver 610 MW by 2017/18, along with when they could be
delivered and projected costs of this investment outlined below the table.
6 Consisting of 250 MW of Domestic potential and 150MW of regional potential.
7 The main fields are Karisimbi with 320MW; Gisenyi with 200 MW, Kinigi with 200 MW and Bugarama with 20 MW.
8 Total resource is estimated at 55bcm of Methane or approximately 700MW; this is to be shared equally with DRC
9 Peat resources include 40,000 ha of peat bogs of various quality – 1992 Peat Master plan. Note this is currently being updated: revised version expected October this year
Figure 10: Proposed energy generation mix
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Figure 11: Generation roadmap to achieve 610 MW of installed capacity
Figure 12 Projected capital costs
53
3.3.3.1.2 Matching Generation with Demand
The chart below illustrates how the proposed generation investment plan aligns to differing
demand forecasts. The lines indicate generation requirements, inclusive of reserve margin.
The following are some key points to note:
1) We will be able to meet our most ambitious generation requirements with the roadmap
presented on the previous page even if geothermal does not materialise over the
coming 5-years.
2) The large amount of, principally peat generation coming online in 2017/18 will allow us
to meet our generation requirements. Of more concern is the short term: 2015 / 2016.
For this reason we need to place an emphasis on developing small scale generation such
as small hydro and peat sites quickly.
3.3.3.1.3 Feasibility of energy resources and their repective technology roadmaps
All of our proposed generation projects rely on indigenous resources that in most cases are yet
to be fully proven. Proving these resources will require time and finance and any attempt to
shortcut this step is likely to bear negative economic consequences. Failure to develop a full
feasibility study for a project in advance of development is likely to result into one or more of
the following:
a. Without noticing, more of the country’s precious natural resources could be given away
to the private sector than needs to be the case, reducing the generation potential.
b. Because there is no proof of resource feasibility, a high risk premium will be attached to
the cost of rasing financing. This leads to more than necessary expenditure.
54
c. Difficulty raising finance. Developers will sign a contract but be unable to raise finance
as investors consider it too risky. Investors are often given 12-18 months to raise
finance and this will be wasted time.
The priority under EDPRS II in this respect is to focus on undertaking the feasibility work
necessary to demonstrate Rwanda’s energy resource potential. This will cost approximately
$100m, costs that the private sector are unlikely to bear and which must be funded by
government or development partners. This is discussed in greater detail in the next chapter on
financing:
Individual generation technologies can be found in annex A.
Geothermal Exploratory Drilling:
Demonstrate geothermal potential in Karisimbi (including generating 10 MW of well-head generation); the same costs in Kinigi.
Geothermal represents the best indigenous prospect for power generation due to its low production cost but the private sector may not wish to bear the risk of exploratory drilling and this will need to be financed by GoR.
Peat
Prove the feasibility and drain peat bogs in preparation for private investment:
Proving the feasibility and draining peat bogs will allow us to either develop our own plant or attract private investment quicker and more cheaply as the risk and timeline associated with the bog-development is removed.
Government proposes to fund the following:
1) Peat development capability 2) Detailed feasibility studies for 4 bogs: 3) Site drainage in advance of peat harvesting
Hydro We have already identified a significant number of local and regional hydro projects, however further
feasibility work is required. Finance is required to:
1. Complete feasibility work on the large regional projects. 2. Further develop the feasibility of our domestic Hydro resources
Methane We propose to fund a wide ranging pre-feasibility study to identify the range of opportunities available
for investors, assessing projects of differing sizes and based on different technology types.
55
Transmission investment
Significant reinforcements will be needed to the existing transmission system in order to accommodate the increased generation and demand over the coming years. These projects are outlined below: Figure 13: Transmission projects
N° International/
Domestic
Category
Tx / Dx
Subcategory
SS / Line
Transmission lines project/Substation Target (Connection, km, or
substation voltage level)
Expected closure
date
14 I Tx L Construction of 220kV transmission lines: Mirama
(Uganda) – Shango (Rwanda)
110 km (Rwanda side) Dec-14
15 I/D Tx L Construction of 220kV transmission lines: Kibuye -
Gisenyi – Shango
180 km Dec 2014
prequalification
phase for the
contractor
16 I Tx L Contruction of 220kV transmission lines: Kigoma to
Burundi Border
80 km (Rwanda side) Dec-15
6 I/D Tx L Construction of 220kV transmission lines: new Bugesera
Peat Power Plant to Shango Substation (via Rilima
(Airport) and Birembo substations)
60 km Feasability study to
end by July 2013
5 D Tx L Construction of 220kV transmission lines: new Karisimbi
220/110/30kV substation to new Ruhengeri substation
20 km Feasability study to
end by May 2013
18 I/D Tx L Construction of 220kV transmission line: Rusumo PS -
Rilima (Airport)
78 km 2016
24 D Tx L Construction of 220 kV transmission line Kibuye -
Kigoma
60 km Feasability study to
end by 2014
17 I Tx L Constructionof 220kV transmission lines: Rusizi III-
Kamanyora-Karongi-Kibuye
116 km (Rwanda side) 2016/2017
1 I/D Tx S Construction of Kibuye 220/110/30 kV Substation 220/110/30 kV May-14
36 I/D Tx S Construction of Shango 220/110kV substation 220/110 kV Feasability study
completed
39 I/D Tx S Upgrade of Birembo substation (220kV) 220/110/30 kV Feasability study
completed
37 I/D Tx S Construction of Rubavu 220/110/30 kV substation 220/110/30 kV Feasability study
completed
3 D Tx S Construction of Rilima (Airport) 220/110/30 kV
Substation
220/110/30 kV 2015
9 D Tx S Constrution of Ruhengeri 220/110/30 kV substation 220/110/30 kV Substation Feasability study to
end by May 2013
33 D Tx S Constrution of Karisimbi 220/110/30 kV substation 220/110/30 kV Substation Feasability study to
end by May 2013
34 D Tx S Construction of Mamba 220/110/30 kV substation 220/110/30 kV Feasability study to
end by May 2013
8 D Tx S Construction of Bugesera 220/110/30 kV substation 220/110/30 kV Feasability study to
end by May 2013
35 D Tx S Upgrade of Kilinda substation (220kV) 220/110/30 kV Feasability study to
end by May 2014
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3.3.3.1.4 Regional and domestic transmission lines
Several power transmission projects are under development to connect us to our regional trading partners and facilitate planned power exchange under the East African power pool (EAC), Nile Equatorial Lakes Subsidiary Action Program (NELSAP) and CEPGL. Under NELSAP, we have the following projects in pipeline:
a. Construction of Mirama – Shyango 220kV transmission line interconnecting Uganda and Rwanda. A consultant has been hired and by January 2013, the EPC is expected to be signed.
b. Karongi – Rubavu –Goma – Shyango - Birembo 220kV transmission line interconnecting DRC and Rwanda. A Consultant in place awaiting anon objection from the financiers to launch the Tender for prequalified firms
c. Kigoma–Ngozi 220/110 kV transmission line interconnecting Burundi and Rwanda. Currently, GoR is in the process of hiring the consultant
3.3.4 Private sector engagement plan
It is not recommended and even then no reasonable for government to undertake all of the
investment outlined in our generation, EARP and transmission roadmaps as public
procurement. Both funds and skills are lacking for this endeavour. We need to encourage the
private sector to assume financing responsibility of this investment, particularly in the area of
electricity generation.
There is an already established Investment Management Unit within EWSA which will be
responsible for engaging with potential investors and structuring projects using competitive
bidding processes to guarantee Value-for-Money.
3.3.4.1 Overall policy approach
The latest energy policy is still in draft format but it is useful to list key elements determining
the Government’s approach and strategy towards attracting private sector participation.
1. Private sector participation, a preferred procurement strategy: Public Private
Partnerships will be a major component of the GoR strategy for the provision of public
services and both social and physical infrastructure including energy. Private sector
participation will be encouraged in all phases of the project lifecycle, including design,
build, and finance, maintain and operate.
57
2. Competitive and transparent projects procurement: Goveqrnment will strongly
promote using competitive and transparent procurement of all related energy projects.
Competitive tendering ensures that Value-for-Money to the Government will be
maximized. In exceptional cases only, listed below, energy projects may also be
identified by the private sector through unsolicited proposals and signing a MOU
between a private party and the envisaged contracting authority.
Written approval from GOR must be obtained before any unsolicited bid may be developed and
procured. Exceptions to this principle are listed below:
a) When there is an urgent need for ensuring continuity in the provision of the service and entering competitive procedures would be impractical;
b) Where the project involves matters pertaining to public security;
c) Where there is only one source capable of providing the required service, such as when the provision of the service requires the use of intellectual property, trade secrets or other exclusive rights owned or possessed by a certain person or persons;
d) In any other case where the GOR authorizes such an exception for compelling reasons of national or public interest.
3. Formalized processes: Government will establish a formal process to ensure that all energy projects move forward inline with GOR’s investment priorities. GOR approvals will be required at each of the following stages: (1) before release of bidding documents; (2) confirmation of selected bidder based on an evaluation report; and (3) final negotiated agreement with selected bidder. The chart below outlines the proposed investment process that is yet to be approved early 2013.
58
Figure 14 Proposed competative process and responsibilities
1. Decision to bring to market as a PPP
EWSA
2. Preparation bidding documents
EWSA
3. Tendering EWSA
4. Selection preferred bidder
Step procurement process Responsible entity Approvals required
MINECOFIN / MININFRA
None
MININFRA
EWSA MININFRA/RDB
5. Final negotiation contracts EWSA RDB / Attorney General
6. Signing contracts EWSA MINECOFIN / MININFRA / RDB /
RURA / Attorney General
4. Promotion of Rwandese private sector: The revised energy policy calls for serious
consideration to include local companies in international consortia undertaking
investments into energy projects, reflected in evaluation of technical proposals in
competitive bidding processes. Additionally, where appropriate, we will develop lots of
a scale that could be handled by local companies – this is likely to be particularly
appropriate for EARP projects.
3.3.4.2 Approach to attracting the private sector
As outlined previously, it will be vital to develop a pipeline of projects that are investor ready
such that investments are aligned to demand. To facilitate this, preparatory and project
development work are essential. For instance, proving geothermal resources is not likely to be
done by a private operator but rather the government has to commit to this, significantly
reducing risk profiles of individual projects. In turn this translates into lower feed in tariffs that
can be negotiated with operators.
The Establishment of an Energy Development
fund: It will be essential for government to
demonstrate the feasibility of projects before
attracting private investments as this stage in
project development is particularly risky. The
illustration on the left indicates: 1) the relative
costs and risk of the feasibility and delivery
59
stages of the project; 2) the usual balance of debt to equity funding; and 3) the parts of the
project we would expect an Energy Development fund to finance.
The Proposed Energy Development Fund is expected to finance a project up until it has been
proven commercially and technically feasible. In a number of cases we may also need to
provide further funding to bridge any perceived feasibility gap (ie the project doesn’t quite
make economic sense on its own but could do if we are prepared to fund a small part of the
project).
A relevant key policy action from EDPRS II will be the establishment of such a fund. Whilst there
are a number of different approaches, the following principles could be followed if we are to
have a successful fund:
1) Clear governance arrangements: On how the money is disbursed and strict monitoring
on the value for money the expenditure is realising in terms of additional generation
capacity.
2) Flexibility to release funds quickly: Currently a number of development partners fund
elements of feasibility work, however, the timescales and governance required often
result in funds not being released quickly enough. An Energy development fund would
be a means of channelling this funding through one simple vehicle.
3) Clarity of purpose: In administering the fund choices will often need to be made such as
selecting between two competing projects or determining whether to provide
additional funding to a project. To allow decisions to be made in a consistent way, it is
vital to define the objectives of the fund clearly.
A recent AfDB study of our Energy Sector proposed that if GoR would be able to capitalise such
a find with around $30m; additional finance could come from development partners. The
strength of the governance arrangements discussed previously will determine how much of
additional funding will be attracted from potential financiers.
Whilst it would be possible for such a fund to generate a return through taking equity stakes in
projects where the feasibility work has been funded, such arrangements are often difficult to
manage. The current proposal is to have this fund initially as a vessel through which
government and development partner finance for feasibility works could be efficiently
channelled with clear governance arrangements.
60
3.3.4.3 Competitive selection processes
Thye government focus in the shortrun (2013/14), will be to develop preparatory work
necessary to allow competitive process to find partners to enter into an EPC contract with. The
table below outlines the projects for which we are likely to undertake a competitive partner
selection process during EDPRS 2.
Figure 15 Projects to be submitted to competitive bidding process during EDPRS II period
Projects to be subjected to competitive process
Hydro Peat Methane Geothermal
i) 8 sites with a collective generation capacity between 13.25 and 39 MW10
i) 3 sites of around 15 MW each following conclusion of the feasibility work outlined earlier in this chapter.
i) A 50 MW site in lake Kivu
i) 50 MW of steam extraction and generation from Kinigi or Karisimbi (exact location to be determined following drilling early 2013)
3.3.5 Strengthening the Investment management
Establishment of EWSA’s investment unit: EWSA recently established an investment unit to
assume responsibility for the entire procurement process of energy projects with a private
sector participation including project inception, feasibility study and dissemination of project
information to potential bidders, procurement and contract negotiations. The EWSA
Investment Unit has been staffed with an international expert in private sector investment
management working to build the capacity of a team of locals. The unit will be tasked with
documenting the investment process to allow efficient handling of the procurement process.
Recruitment of transaction advisor: In addition to the investment unit, government has
recently contracted a firm of transaction advisors who will, under the direction of the
investment management team provide a pool of financial, technical and legal expertise to assist
in project packaging, development and negotiations with the private sector.
3.3.6 Operational efficiencies and financially sustainability of the utility
Subsidies and a transition towards a cost-reflective tariff regime: As outlined in chapter two,
the current electricity tariff is heavily subsidised, with almost 43% of EWSA’s revenue coming
10
Note the 13.25 MW comes from the Hydro Atlas whilst the 39 MW is a more optimistic projection developed by a private sector
developer. We will have a far clearer understanding of the generation potential once feasibility studies complete on these sites in
mid 2013.
61
through government subsidies in 2011/1211. These subsidies were introduced to insulate
consumers from the impact of the costly rented Diesel powered generation we needed to use
as our generation capacity failed to keep pace with demand. Based on the generation
investment roadmap and the demand forecast outlined earlier in this chapter, we will be able
to reduce rental diesel by 2015. This represents a key policy action in the EDPRS II plan.
As a result the costs to EWSA of generating electricity will drop significantly and it will no longer
be necessary to grant direct subsidies to the electricity tariff. In short, EWSA’s tariff will become
cost reflective. The transition towards a cost reflective tariff is important for a number of
reasons:
1) Direct subsidies to the electricity tariff disproportionately benefit the wealthy who
typically consume more electricity.
2) Direct subsidies are directly linked to energy consumption. The higher the consumption,
the higher the cost of subsidy. it should be noted that direct subsidies channel money
away from other government projects and retards development.
3) Direct subsidies inhibit investment in generation. The need for the utility to be
subsidised represents a significant political risk for investors and is likely to reduce the
level of investment or significantly increase the returns investors expect.
Transitioning EWSA away from operational subsidies is only one part of developing a financially
independent utility. In the long-term, EWSA should be able to raise finance on its own. This
level of financial independence would free up a significant portion of the government’s limited
ability to borrowing and would develop an electricity sector more conducive to foreign
investment. To achieve this, three high-level activities need to take place:
1) EWSA needs to separate its accounts between the different business entities
(Generation, Transmission etc) to allow any prospective lender to understand their
business operations and cash-flows.
2) EWSA would need to be converted into a corporation (still government owned). This
would allow EWSA to borrow money on its own account and the greater level of
independence from government would provide creditors with additional comfort.
3) EWSA would need to go through a thorough process to improve its credit worthiness.
The starting point would be the hiring of a consultancy or credit-rating agency to assess
their current business operations and organisational set-up and make
recommendations. Such recommendations are likely to include a requirement to change
the financial or organisational structure.
11
RWF 20.9Bn Subsidy of total revenue of 48Bn
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Operational Efficiencies: EWSA’s operational performance has improved significantly over
recent years through rehabilitation of many of the main substations and key sections of the
secondary distribution network with financial support from the government and development
partners. As a result, electricity outages have declined by about 20% in 2005 to 2010 while
electricity losses have dropped from 25% in 2005 to approximately 19% in 2012. In order to
maintain a regionally competitive tariff, these efficiencies and operational improvements must
continue. There are a wide range of areas through which EWSA could achieve operational
efficiencies including but not limited to:
1) Improved dispatch: As our generation mix diversifies, we will have a wider range of
power plants to select to supply energy at any given time. Given the differing costs of
this plant, these decisions could have a significant impact on the cost of energy.
2) Reduced losses: As outlined in chapter 2, we are currently developing a loss-reduction
strategy to increase the portion of energy generated that arrives at the end consumer
3) Preventive maintenance: Prudent maintenance scheduling on network and generation
assets can proactively prevent outages and damage to components.
4) Supply chain efficiencies: There is always scope for efficiencies in the supply chain. Be it
purchasing items in bulk to reduce costs, sourcing alternate suppliers or reducing
storage costs.
63
3.3.7 Use of Biomass and transition to alternatives
Approximately 85% of Rwanda’s primary energy consumed is from biomass resources. The
energy sector strategic plan aims to reduce biomass consumption from 85% to 50% by 2017.
This will be done through promotion of use of biomass substitutes as well as introduction of
more sustainable methods of biomass energy consumption. This will reduce demand for
biomass energy resources and reduce strain on the environment. Potential biomass substitutes
referred to herein include the following;
Liquefied Petroleum Gas (LPG). LPG is used primarily for cooking and heating to replace
or supplement the use of wood and charcoal especially in urban and peri-urban areas.
There are already efforts to promote the use of LPG in Rwanda such as the temporary
suspension of VAT on LPG imports. Government will keep exploring other measures
such as eliminating the non-economic LPG cylinders (20Kgs), incentives on cost of
investing in required infrastructure, bulk purchase and storage facilities among others to
ensure affordability and efficiency of LPG facilities.
Electricity: Government is planning to ensure universal access to electricity by Rwandan
households through grid and off-grid sollutions by 2017. Affordable electricity can be
used for heating and boiling purposes especially in urban and semi-urban areas majority
of whose disposable income would enable them to have multiple uses of electricity
including heating by choice. As of now, ≈ 98% of all Rwandan families use biomass for
their daily cooking, including those households that are connected to the electricity
network in urban areas mainly due to the high cost of electricity that makes it less
economical for cooking.
Biogas: Government has put in place an elaborate program for disseminating bio
digesters in households, schools and prisons to reduce demand for wood and charcoal
and improve people’s health. The National Domestic Biogas Program (II) targets to
disseminate at least 100,000 additional bio-digesters in households by 2017. Through
the institutional Biogas program, government is promoting the use of biogas for cooking
and heating in schools, hospitals and prisons. To date, 11 out of the 14 prisons have
been connected with bio-digesters. Under the NDBP, EWSA will continue to give
technical assistance on the installation, use and maintenance of bio-digesters which
reduces the demand for wood fuels previously used in cooking. For the institutional
biogas program, EWSA will work with MININTER and MINEDUC to ensure effective
dissemination strategy for bio-digesters to the Rwandan prisons as well as schools
64
respectively. To fast-truck the program, a National taskforce has been instituted to
promote use of alternative sources of energy of which biogas is part.
Peat briquettes: Rwanda has estimated reserves of 155 12 million tons of dry peat
spread over an area of about 50,000 hectares in Akanyaru, Nyabarongo, Rwabusoro and
other areas. Peat lands have traditionally been thought to be prepared to supply peat
for electricity generation. However, though currently used on a very small scale,
government through EWSA will continue to explore possibility of large scale and
commercial use of peat briquettes as biomass alternatives for cooking in homes and
factories. These briquettes consist of shredded peat, compressed to form a virtually
smokeless, slow-burning, easily stored and transported solid fuel used in cooking. The
use of smokeless briquettes will reduce the emission of GHG to the environment and
reduce the demand for wood fuel and charcoal both historically used for cooking.
Kerosene: Kerosene widely known as “paraffin” can have multiple uses including
heating, lighting, cooking and to some extent in transportation (powering aircraft jet
engine). However, in Rwanda, kerosene is majorly used in lighting in remote areas
without access to electricity and to a lesser extent for cooking and boiling using
kerosene stoves especially in urban and semi-urban households. Although it may not be
the first best source of cooking and lighting energy due to its potentially negative
impacts on the environment (Emission of GHGs), it is the most economic alternative to
wood and charcoal in cooking, heating or lighting. Under the petroleum subsector, the
government through MINICOM (fuel imports) and MININFRA (fuel infrastructure) will
keep strategic fuel reserves including kerosene to ensure security of supply and price
stabilization practices. Cheap supply of kerosene will ensure low wood and charcoal
usage thus reducing the ever increasing wood deficit.
Other efforts planned to meet the strategic target of ensuring efficient use of biomass resources are categorized under demand and supply side interventions that promote sustainable use of biomass energy resources as discussed hereunder;
Demand side interventions
Promotion of improved charcoal and wood stoves. Government through EWSA will
support sensitization workshops and training seminars on the economic use of
improved cookstoves. This will boost demand for modern and improved cooking
technologies, increasing private sector motivation to invest in this business and reduce
the use of inefficient and traditional three stone wood stoves. The government target is 12
Peat Master Plan prepared by EKONO
65
to ensure at least 80% of the urban market with access to improved cookstoves by 2015
and 50% in rural areas. Ultimately, the target is to reach 86% and 63% of urban and
ruaral access to improved cookstoves by 2020 respectively.
Technical support on the choice of stove models. The Rwandan government initiated
an Improved Cook Stove (ICS) program in the late eighties to combat deforestation.
Various programs have been implemented since, leading to a penetration of ‘improved’
stoves of over 60% by 2012. EWSA as the technical lead in promoting the use of energy
efficient biomass resources will offer technical guidance on the selection of the most
fuel-efficient cook stoves, which will reduce the volume of firewood required as well as
the household budget spent on wood or charcoal for cooking. MININFRA through EWSA
will continue facilitating the promotion of “Canarumwe” and “canamake” propulary
known as rondereza(use of less fuel) cookstoves programs in rural areas to increase the
proportion of the population using ICs. A national cross sector task force is already in
place with full mandate to fasttruck the implementation of the alternative energy
prorams including improved cookstoves. The technical taskforce is currently planning a
massive m campaign and awareness creation to be carried forward through mass
media, public demonstrations and public gatherings like “Umuganda” and stakeholder
meetings to ensure effective implementation. All-level committes up to the village units
have been created to ensure effective awareness and implementation of the program
Energy conservation. Wood and charcoal are not demanded by residential consumers
alone. Government will promote energy conservation measures among large non-
domestic users of wood and charcoal such as those burning bricks, with the objective to
reduce their consumption by 2017. These are the biggest users of wood fuels and their
continued use of inefficient wood resources will greatly impact on the environment. This
will be through the of more carbonised charcoal, hydraulic charcoal and other improved
technologies.
Supply side interventions
Simplified licensing scheme for charcoalers. MININFRA will continue calling for a more
effective and simplified regulatory and licensing system for charcoalers from the
responsible instituions. This strategy proposes a more decentralized licensing system
done by local authorities following national guidelines to allow for a more transparent
and sustainable wood harvesting. Clear requirements for tree harvesting and
replacement should be put in public domain at local administrative levels to improve
public awareness and adherence to the said regulations.
66
Efficient management of public plantations. There are evident cases of illegal tree
harvesting practices on public (district and national) plantations that do not conform to
the environmental best practices(BEST report, 2009). Though the Ministry of
Infrastructure plays a secondary role in biomass conservation, the Ministry will work
with MINIRENA and other responsible authorities to Stop illegal harvesting of trees in
public plantations, set up management plans for restoring public national and district
plantations13, develop and promote adapted tree management and rational cutting
methods, train local bodies and professionals to ensure improved forest preservation
practices.
Train charcoaling professionals. To manage supply side constraints whilst maintaining
the right volume of trees harvested for charcoal, MININFRA will promote the use of
improved charcoaling techniques that ensure high yield (kgs wood/kgs of charcoal)
through training programs and sensitization workshops to the local levels. More efforts
will be directed to the dissemination of improved carbonization techniques and
reorganization of charcoal supply chain in supply centres of Rwanda. From the last
biomass survey undertaken in 2009, the charcoal yield14 was found to be ≈ 12%. The
target of the energy sector strategic plan is to have this improved to at least 15%
efficiency by 2015. MININFRA will use existing local authorities to indentify local
cooperatives involved in charcoaling who will also train other charcoalers in improved
charcoal harvesting.
3.3.8 Petroleum subsector
Rwanda currently imports all the petroleum products from other producing and supplying
countries. The cost of oil imports is on average ≈ 25% of total import costs and takes ≈ 55% of
the entire export revenues. Besides, the fact that Rwanda is a price taker, given the unstable
international oil prices, oil products have always been among the leading contributors to
inflationary pressures that pose risk to macroeconomic stability in Rwanda. Herein the energy
sector strategic plan, several measures have been proposed to remedy the above challenges
summarized in the following areas of interventions.
Reserve /storage capacity. To ensure security of supply, GoR commits to ensure that an
equivalent of 4 months of fuel consumption will be kept for commercial and strategic
purposes to cushion the economy from future oil crises like what happened in 2007
after the Kenyan political turmoil. GoR through the Ministry of Commerce will provide
13
GoR aims to have over 50% of public plantations under an organized management system. We will ensure rational cutting
practices by 2015 (75% by 2020) 14
BEST report(2009)
67
incentives to the private dealers to keep 3 months equivalent of fuel consumption as
reserves while government will keep 1 Month equivalent of fuel for strategic reasons by
2017.
Price stabilization. We have seen from the analysis above that Rwanda is a price taker
and always victim to exogenous price shocks since the economy relies on exclusively
imported petroleum products. To manage the impacts of exogenous price shocks,
government will motivate the private importers to enter bulk purchase arrangement to
enable government administer price stabilisation policy. Government will borrow a leaf
from other countries like Kenya and Tanzania where this scheme has been successful to
ensure that the same is done in Rwanda, taking into consideration country unique
situations. Further to this, government will develop an appropriate domestic fuel pricing
strategy, that incorporates major concerns of the business community. Government
will specifically study the possibilities of addressing the high price fluctuations in the
aviation fuel market as Rwanda aims to become an aviation hub in the region.
Ensure appropriate Petroleum standards. As already discussed in chapter 2, in this
document, lack of clear standards and quality control measures will compromise the
quality of petroleum products imported and used within the country. Other than price
stabilization, in order to increase investor confidence in using petroleum products in
Rwanda and to protect the citizenry from substandard products, , RBS and NICA will set
and enforce product standards for all the Develop downstream petroleum activities.
Petroleum standards will encompass the quality of infrastructure (storage and import
vessels) as well as petroleum products imported into the country.
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3.4 Contribution to EDPRS 2 thematic Areas/Priorities
Figure 16: Impact of energy investments on EDPRS II thematic areas and priorities
Economic
transformation
for rapid growth
Diversifying the economic
base for exports
Energy must be available and cost effective to drive
economic growth; this requires minimising the tariff
through efficient investment. Petroleum products as a
form of energy is drives the transport sector and
petroleum price movements impact on macroeconomic
balances.
Private sector development,
competitiveness and service
delivery
Unlocking infrastructure
requirements
Urbanization Availability of energy services will accelerate urbanisation
and human settlements. There is a tendency for the
exodus of households from un electrified to areas with
electricity. This comes with emerging rural socio-economic
amenities that are engines of rural growth.
Rural
Development
Human settlements
Agriculture modernization The availability of sufficient and cost effective energy
solutions will drive agricultural mechanisation (electricity
and petroleum products)
Environment and natural
resource management
Sustainable use of biomass energy resources is mandatory
of we are to achieve sustainable development. Improved
biomass sollutions such as biogas and improved
cookstoves preserves the environment and promotes
clean growth.
Productivity and
youth
employment
creation
Education and skills
development
Access to electricity is essential to facilitate education on
use of modern technologies. Youth training centres such as
TVETs require affordable electricity.
Ensuring a healthy workforce
A Transition away from traditional biomass to cleaner
energy forms will promote a healthier workforce
Job creation Significant employment will be generated in the
installation of our modern energy infrastructure.
Additionally cost effective energy solutions open the door
to increased job opportunities through improved business
productivity
Accountable
Governance
Judiciary reforms and rule of
law
Energy products are less appropriate here. However,
providing affordable electricity is a form of government
accountability to the electorate
Citizen centered approach –
including public
accountability
Development
communication
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3.4.1 Economic transformation for rapid growth
Energy undergirds civilization and has powered sweeping economic changes that have
transformed the world over the last two and a half centuries. However, just as the economy
has changed, so has the energy mix that fuels it. The development of the modern world has
been a story of evolving new uses for energy and constantly growing energy demand. New
forms of energy and new technology to harness that energy have been developed over time,
shifting the energy balance and expanding the menu of energy sources(World Economic Forum,
2013)
Rwanda’s economy like any other economy derives its growth significantly from energy
resources. All the sectors of the economy from transport, manufacturing, construction, mining
and agro processing among others all require energy supplied adequately and cost effectively if
the investors in these sectors are to reap economic benefits. At a micro level, energy enables
people to cook, heat, transport, and entertain, all these being the dominant areas that employ
most of the people of Rwanda. Electricity to power our TVs, fuel for our cars, or heat for our
homes, is supplied by the energy sector. It is therefore apparent that economic growth is
inextricably linked to energy. As energy is tied to our economy, our required economic growth
is dependent upon equitable access to energy, sufficient supply at affordable rates.
Under the EDPRS II Economic Transformation, thematic area, energy and Private Sector Development (PSD) emerge as the leading sectors, accounting for more than half the total cost of financing. Most of the costs are derived from surveys, feasibilities and development of popwer pojects that promote Rwanda’s self-reliance in power supply.
Boost on business15 Development: The cost of power contributes a significant portion to the
overall cost of production in Rwanda. Rwanda has one of the highest tariff rates(US$ 21
cents)compared to the region. The sector strategy looks to ensure affordable and sufficient
power supply by utilizing other alternatively cheaper sources to replace expensive fossil fuels.
This will boost local investments into large, Small and Medium Enterprises, creating
employment opportunities and positively impacting on the state of people’s welfare. People
will be able to use electricity for income generation activities like putting up welding shops, hair
salons, kiosks, grain milling centres and others where majority of Rwandans are employed.
Promoting agricultural transformation: Agriculture sector is a backbone of Rwanda’s the
economy employing over 80 % of the population and contributing approximately 35 % to
Rwanda’s GDP. The revised vision 2020 targets indicate that agriculture sector is planned to
grow from the current annual average growth rate of 5.8% to 8.5 percent by 2020. The planned
15
Small, Large and Medium Entreprises
70
structural shift from conventional farming methods to agro processing will require cheap and
sufficient energy supply in powering machines and value addition. The sector strategy looks to
provide over 70 percent of access to communities including agro based dealers and business
units and this is hoped to support the planned sector growth significantly supporting economic
transformation.
Further, in order to reduce seasonal disruptions in agricultural productivity through reduced
harvests, an elaborate irrigation program has been designed by MINAGRI. Irrigation systems
require adequate power supply in form of electricity to pump the water to irrigated areas or
adequate supply of affordable fuel to run diesel generators. The energy strategy will aim to
ensure security of supply of both electricity and fuel to irrigation projects that promote
agriculture transformation. We expect that providing reliable power supply to rural and semi
arid areas will make it possible for farmers to keep to their irrigation schedules, conserve water,
save on pump maintenance costs and use labour more efficiently. These and other benefits will
help drive agricultural production to new heights while improving the quality of life for agro
based households.
Promotion of mining and mineral value addition: Rwanda’s private sector is getting heavily
involved in mining activities. Currently some of the mining companies still lack sufficient
electricity and complain of high electricity tariff. The two smelting companies in Kigali and
Gisenyi are not operational due to the high cost of electricity. Providing access to affordable
and sufficient power supply is a positive step towards efficient mining activities especially in
mineral smelting. Further, as the mining sector looks to ensure value addition to mineral
exports, there is need for unhampered supply of cheap and adequate electricity if these
activities are to be successful.
Enegy efficiency: The energy sector strategy is considering energy efficiency measures that are
poised to ensure reduced power usage through the use of energy efficient technologies. EWSA
will ensure continued use of energy saving products to reduce power consumption without
negative consequences on output. Saving watt hours used per day is vital since it will reduce
the energy bill to the households, businesses as well as government. This income saved can be
used for other productive activities.
Boosting industrialisation plans. For Rwanda’s economy to be transformed, we need a
structural shift from traditional agriculture to industry and service sectors. Industries and
factories will require sufficient energy solutions to generate desired output. The national
energy strategy will ensure sufficient supply of electricity required in industries and factories
and at economically affordable tariffs and this will be a formidable tool for economic
71
transformation. The target for the next 5 years is to ensure 100% sufficient access to clean and
affordable energy by industries and Medium and large enterprises that are engines of economic
growth.
Reduce declining trade Balance. The petroleum strategy looks to improve oil strategic reserves
capacity to a tune of 150 billion litres by 2017 to avoid future supply shocks that affect fuel
prices. Oil products contribute significantly to Rwanda’s import bill (over 25% of revenues) and
an unplanned price fuel price hikes affect government planning and worsen the trade balance
due to a spike in oil import bill. The upstream petroleum looks at fast tracking oil exploration to
ascertain whether Rwanda can have its own oil reserves to reduce on transport costs and so the
oil import bill. In the medium to near long term, a mix of ensuring appropriate supply routes
and bulk purchasing arrangements will be the advisable ways of managing fuel prices before we
are able to determine our own fuel prices.
Demand stimulation: Increased energy prices reduce demand by reducing use of energy
services and motivating selection of higher conversion efficiency equipment. For example, the
price per litre of petrol will affect transport and other costs of running machines, with a final
price implied to the final consumers. This will affect demand especially for commodities with
fairly elastic demand. The energy strategy looks to ensure affordable power supply that in a
way will have a systemic price effect on the final commodities on the market and act as an
indirect approach to demand stimulation since reduction in commodity prices is the same as
increase in consumers’ income. Higher effective demand is a stimulus to economic growth and
transformation.
3.4.2 Rural Development
There are currently visible disparities between rural and urban areas in terms of access to
electricity and income levels. Rural access to electricity stands at ≈ 4.7 percent compared to 46
percent for urban areas. The aim of the energy sector strategy under the Electricity Access
Rollout Program (EARP) is to increase electricity access from the 16 percent (2012) to 45 and 55
perecent through grid and off-grid connections respectively by 2017. EARP will mainly target
rural areas and a great deal of rural households and business units are set to benefit from this
program. This effort will bridge the rural-urban disparity in access to electricity , thereby
improving on businesses start ups, enable long working hours and promote rural based
employment.
The target of the EDPRS II is to create regional economic zones in the 4 the regions on top if
the existing Kigali-based Special Economic Zone. Rural electrification will support the initiatives
to construct better schools, hospitals and clinics, roads and other social amenities and there will
72
be no more need for rural dwellers moving to urban areas in search of better quality of life.
Established social infrastructure and reduced Rural Urban Migration (RUM) will ensure
retention of productive labour force to rural areas, reverse to urban rural exodus and support
rural development.
Table 1.5 below shows the direction of migration for internal migrants, taken from the last
Integrated Household Survey(EICV III, 2010/2011) . According to EICV III, the direction of
migrations tends to grow towards the capital city compared to EICV2. In the last five years, the
proportion of the migrant population opting for the capital city increased from 19 to 27%
indicating possibility of lack of adequate infrastructure including electricity and opportunities
for growth in rural areas compare to urban areas.
Figure 17: Rwanda's internal migrations
Source: National Institute of statistics (EICV III)
It should be noted that rural electrification enhances quality of life at the rural household level
and stimulates the economy at a broader level. The immediate benefit of electrification comes
through improved lighting, which promotes extended hours of study, reading, business
operations and other household chores, and in turn contributes to better educational
achievements and business productivity due to long hours of work. Lighting can also benefit
many other household activities, such as sewing by rural women, social gatherings after dark to
engage in productive discussions and other resourceful engagements.
Electronic devices such as radios and television are common media of communication to rural
areas, thereby bridging the rural-urban knowledge gap and information asymmetry especially
market related issues. All these quick mediums of communication require reliable power
supply to avoid delayed information dissemination.
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In addition to boosting income flows, rural electrification has its strongest impact on school
attendance by children in households adopting electricity since electricity substitutes fire wood
collected over long distances consuming much of the time of school-going children and creating
rampant absenteeism. These impacts obviously have a long-term influence on the welfare of
the country given the impact of education on economic transformation as these children move
into adulthood and form a formidable workforce..
3.4.3 Productivity and youth employment
By the standard definition, a youth is anybody between the ages of 14 to 35. According to the
last integrated households living conditions (EICV 3) survey, there are a total of 4,159,000
people between the ages of 14 and 35 in Rwanda.. Overall, 14–35 year olds make up 39% of the
total population of Rwanda of all ages and this is a formidable tool to Rwanda’s future
economic prosperity. However, this group requires skills and expertise if they are to meet the
labor market demands. Government has established Technical and Vocational Education
Training colleges to accommodate these youth and equip them with hands-on skills into
carpentry, welding, plumbing, building and construction as well other engineering activities,
there is strong need for cheap and adequate energy resources if these activities are to bear
meaningful results.
The energy sector strategic plan will ensure steady supply of affordable energy services to TVET
centres to promote youth productivity and boost employment opportunities. In Rwanda most
of these youth are employed in Small and Medium Rwanda (SMEs) like video centres and
photography, hair salons, cinema halls and others. These require sufficient uninterrupted
power supply or else they burn heavy fuels expensively disrupting their business profitability.
3.4.4 Accountable Governance
It is the responsibility of any pro people government to provide socio-economic necessities. The
fact that government raises its big part of resources internally from tax revenue paid by
Rwandan residents, the tax receipts ought to be well spent on strategic investment projects
that pay back to the people including provision of efficient and affordable energy services. It’s
incumbent upon government to make clear fulfilment of its promises and commitments related
to electricity and other energy sevtrices in form of exemplary accountability to its people.
Government plans to ensure more local participation in the development of their own energy
resources. This reflects a deliberate effort by government to make its citizens part of the nation
state governance though direct or indirect ownership of their development process.
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Government can communicate effectively through its administrative structures to the people
using various foras such as emails, radios and television, twitter and other media. This even
allows direct link between the last unit (Umudugudu) to the top of the leadership hierarchy and
this cannot be done easily without electricity. The proposed rural electrification program is
therefore meant to promote good governance through effective government policy
communication that has an impact on compliance and development.
3.4.5 Cross cutting issues mainstreaming
3.4.5.1 Capacity building
The current levels of human and institutional capacity is not sufficient to deliver on the sector
commitments with ease. To implement energy sector projects, on time, and scale up project
delivery, an enabling institutional framework and skilled personnel is a pre-requisite. This
energy sector strategic plan puts in place measures of improving energy sector organization and
management and develops capacity building plan to cover incumbent skills gaps for the sector.
Trainings and Knowledge transfer-The capacity of energy sector staff will be enhanced
through knowledge transfer from long term experts and through short training courses.
There will also be recruitment of external expertise for major transactions in order to
ensure that government is getting beneficial deals.
Strategic Capacity Building Initiative (SCBI)-The ministry has hired both local and
international sector counterparts sponsored by the Strategic Capacity Building Initiative
(SCBI) to boost the energy sector. Local counterparts will learn from their international
counterparts and it’s hoped that with the expirely of their (international counterparts)
contracts, local expert’s contracts will be able to move the sector to further desired
levels.
3.4.5.2 Gender and family promotion
Some of the most profound impacts of the energy sector will be improvements in the lives of
rural women. Reliable electricity supports SMEs in which majority women are employed, raising
their incomes and saving time spent on domestic household chores like firewood collection.
The average duration of study time for school going females will increase, and female dropout
rate is expected to go further down. On the demand side, especially in rural areas, there is a
need to relieve women and children from the burden of searching for firewood collected in
long distances away from their homes. All stakeholders within the energy sector need to
participate and take deliberate sensitization actions to encourage women participation in
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energy related education, training sessions, programmes and projects, planning, decision-
making including energy policy implementation
Women Economic Empowerment: Empowering women is empowering the nation. In Rwanda
like anywhere else in the world, women are exclusively held in domestic household chores of
cooking, fetching water, and collecting fire wood especially in rural areas without access to
affordable electricity. It should be noted that women contribute over 55% of the population yet
they are held up in unpaid care work and their role in the economy is often overlooked.
Providing easy access to electricity for boiling water and cooking will specifically address
women’s time burden and they will use their time productively for paid employment. The
Biomass strategy looks to ensure supply of improved cook stoves to especially the rural poor
(predominantly women). This will help reduce women’s burden of collecting fire wood, reduce
government cost of preserving the environment through reforestation and ensure women
productivity.
Adult women spent most hours of their day cooking and collecting water and fuel wood, which
leave them with little time for other productive activities. Without modern fuels and stoves,
and a lack of mechanical power for food processing and transportation, women often remain
tied to drudgery. This strategy is set to provide solutions to such challenges.
Gender energy related data: The first step towards ensuring that the specific basic needs of men and women are addressed over the short and long term is to collect data broken down by sex. Collecting, analyzing and using gender-disaggregated data both at national and decentralized levels is necessary for the energy sector to take effective gender based policy decisions. The sector will reinforce the production, presentation and use of gender disaggregated data and regularly shared with interested parties and decision makers using the sector Management Information System (MIS) and other reporting platforms. Future policy making and strategy reviews should be very much informed by the gender disaggregated data. Energy sector gender strategy: The Government of Rwanda recognizes the importance of
promoting gender equality and women’s empowerment as an effective pathway for combating
poverty and foster sustainable development. A national gender policy was developed to
facilitate processes of addressing gender disparities and engender all policies and development
programmes/projects at all levels. In order to institutionalize gender equality across all sectors,
one of the requirements of national gender policy is that each sector will develop a sector
specific gender strategy. The purpose of the sector specific gender strategy is to examine how
energy sector policies, programmes/projects and conditions relate and impact on women and
men’s needs by taking into account the different needs and conditions of women and men in
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the sector. This enables the sector to come up with appropriate policies, programmes/projects,
plans and activities that clearly responds to different needs of men and women. It is in this
context that the energy sector will develop and implement an energy sector gender strategy to
accelerate and continue to promote gender equity and equality in the sector
3.4.5.3 HIV Issues
The Ministry of Health broadcasts all her health related programs on radios and Television
alongside other social media like twitter, face book and YouTube. All these facilities require
constant power supply without which communication will be delayed and or derailed. HIV
awareness campaigns to be broadcast over the same media will help reduce on infection and
transmission rates as well and treatment provided by health centres. The energy sector
Strategic Plan targets to electrify 100 percent of health administration centres to promote
health services provision and facilitate campaigns to combat killer diseases such as Malaria and
HIV/AIDs.
3.4.5.4 Environmental conservation and green growth
Rwanda has chosen to embark on a low carbon development pathway reflected in its recent
National Strategy on Climate Change and Low Carbon Development. Rwanda has potential for
renewable low carbon energy resources mix which is the foundation for a low carbon economy.
Although diesel is currently used for 39% of electricity production, this is planed to be phased
out and replaced with geothermal, hydro and solar which are all clean energy sources.
The strategic objective of the climate change and low carbon development strategy is to
achieve Energy Security and a Low Carbon Energy Supply that supports the development of
Green Industry and Services. Green growth is an emerging concept that recognizes that
environmental protection is a driver of global and national economic development.The
development of Rwanda’s energy resources will be in harmony not in contradiction with the
green growth strategy that was adopted by cabinet. In line with the above, Rwanda is planning
to enact relevant legislations such as requiring new energy using infrastructures to incorporate
green design to ensure efficient use of energy solutions. These may include; provisions for solar
water heating systems, natural lighting, ventilation and open office design among others to
reduce the demand for energy. The strategy for low carbon development is the first attempt
towards a climate resilient and low carbon development pathway for Rwanda.
On the other hand, government of Rwanda looks to concentrate on developing more clean and
renewable energy resources that ensure environmental conservation. The new domestic
generation technologies such as geothermal, methane and solar would be used to replace
expensive diesel power generation but also preserving the environment.
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Rwanda currently is planning to develop its indigenous energy resources to scale up generation
capacity to desired levels in line with demand. Rwanda’s energy sector is heavily dependent on
environmental resources with around half of Rwanda’s electricity coming from hydropower and
more than 80% of the population depending on fuel wood for their energy needs.
In recent years, poorly protected watershed areas and erratic rains have affected Rwanda’s
hydroelectric power generation resulting in a need for additional diesel generation. Diesel
generation costs the government over $65,000 per day (in direct fuel inputs only). It also
contributes to greenhouse gas emissions. With all the above in mind, government has put in
place measures to mitigate the potential negative impacts of energy resources exploitation and
be able to strike a balance between energy generation and the attendant negative
consequences.
Overall, efforts to mitigate impacts of climate change and preserve the environment include the
following among others;
Reduce reliance on traditional biomass energy. Government is working on a campaign
to reduce reliance on traditional forms of biomass from 85% to 50% by 2017). This is
being planned through the use of improved cooking technologies that reduce demand
for wood fuel and emit less GHGs to the environment. Other initiatives related include
the biogas program that is proposed to replace wood fuels for cooking as well as
Improved charcoal carbonization techniques, reducing charcoal yield and so does the
demand for wood cultivation.
Focus on local and renewable energy sources. The policy for the next 5 years going
forward is to put preference on the exploitation of domestic resources such as
geothermal, methane gas and solar resources to replace expensive diesel fuels that
even more are environmentally hazardous.
Increasing energy efficiency. This will be done through energy efficient devices such as
CFLs, Solar Water Heaters. Over 400,000 CFLs have been distributed and more 400,000
were yet to be disseminated by the end of 2012. This is estimated to have saved over
36 GWs of electricity. Government intends to make it a policy to have all the new
buildings installed with solar water heating systems to reduce use of electricity and
biomass energy for boiling water. This is expected to reduce a great deal of the impact
on the environment.
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Mandatory Environment Impact Assessment (EIA). All power projects are presupposed
to have environmental clearance and the Impact certification before project
implementation. This is even compounded in the RDB’s requirements before issuing an
investment certificate to any investments into energy resource development. Where
plants are operational before environmental clearance, a mandatory Environmental
audit is proposed by REMA.
3.4.5.5 Risk mitigation and control measures
Energy sector infrastructure can double as a potential cause for and victim of likely disasters in
Rwanda. Flooding, earthquakes and others such as volcanic eruptions may destroy energy
investments and disrupting national energy services provision and development in general;
likewise, oil spills, methane gas explosions as well as fire explosions at fuel storage facilities can
be catastrophic to humanity and the surroundings. In respect with the above, it is therefore
important to integrate a Disaster Recovery Plan into energy sector planning for the next 5
years. Key areas for mainstreaming disaster management plan into the energy sector include:
Conduct vulnerability and risk assessment in all energy related investments specifically
on the exploitation of Methane Gas and fuel storage facilities.
Develop contingency and evacuation plans in case of methane explosion in Lake Kivu
Promote alternatives energy sources( e.g. biogas) for environment protection in order
to reduce disaster risks
3.4.5.6 Regional integration
Rwanda fully supports the deepening of regional cooperation and integration in the energy
sector. In particular, Rwanda is committed to participating actively in the formulation of the
Regional Energy Master plans being coordinated by the East African Community (EAC), and
similar regional energy planning such as Common Market for East and Southern Africa
(COMESA) a subsidiary of the Communauté Economique des Pays des Grands Lacs (CEPGL) and
other regional initiatives. Other regional initiatives addressed under the national energy
strategy for the year 2012/2017 include;
o Regional strategies for efficient procurement, transportation and storage of petroleum
products.
o Regional electrical power projects promoted under the auspices of the East African
Power Pool (EAPP)
o The Nile Equatorial Lakes Subsidiary Action Program (NELSAP), which falls under the Nile
Basin Initiative (NBI)
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o Joint development with the DRC of Lake Kivu methane gas and petroleum exploration.
The EAPP is a regional intergovernmental body based in Addis Ababa Ethiopia with the sole
mission of pooling of electrical energy resources in a coordinated and optimized manner to
provide affordable, sustainable and reliable electricity in the region. The long term Vision of the
energy sector in this context is to promote regional exchange of power resources. The EAPP is
at an advanced stage in preparation for the necessary structures to commence market
operations (estimated to begin in January 2013) based on the strategic road map. Trade in
electricity and ancillary services will be available and coordinated at the soon to be established
Coordination Centre for the East African Power Pool (EAPP). As a member of the East African
Power Pool and the Nile Basin Initiative, Rwanda also has the opportunity to export/import
electricity generated from hydropower plants from further afield in the region. In this sense,
interstate energy activities will be supporting regional economic integration.
The strategic plan considers undertaking projects for regional interconnectivity. This will
consider connection networks between Rwanda Burundi, Tanzania and Uganda. Other energy
related initiatives (projects and programmes) to promote regional integration include;
Regional Strategy on scaling up access to Modern Energy Services in EAC: The strategy has 4
main targets, which were approved by EAC Energy Ministers in August 2005, to be fulfilled by
2015, in line with MDG framework in Scaling-up Access to Modern Energy Services. These are:
1. Provide access to modern cooking practices for 50% of the population that currently
uses traditional cooking fuel;
2. Provide access to reliable electricity for all urban and peri-urban poor;
3. Provide access to modern energy services for all schools, clinics, hospitals and
community centres; and
4. Provide access to mechanical power for heating and productive uses for all
communities.
The Strategy has four service areas that include:
1. Policy harmonization at regional and national level;
2. Capacity building of both public and private sectors to implement the strategy;
3. Formulation and implementation of investment programs; and
4. Strategic coordination and Programme management at regional and national level.
The EAC Regional Cross-Border Electrification Policy and Model Power Supply Agreement:
Cross-Border Electrification (CBE) allows consumers to benefit from resources across the border
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that are nearer than domestic alternatives, and can allow marginal projects to become feasible
when aggregating loads at both sides of the border. CBE is therefore defined as follows:
1. The extension of the distribution network and services from the network of one Partner
State to communities and other load centres of a neighbouring Partner State.
2. The development of a trans-boundary energy resource with its associated distribution
network for the purpose of supplying electricity to the communities and load centres
within the borders of two or more Partner States.
Eastern Africa Power Pool (EAPP) and East African Community (EAC): Under the EAPP - EAC
identifies power generation and interconnection projects, at Master Plan level, to interconnect
the power systems of EAPP and EAC countries in short to Long term. The EAPP - EAC developed
common Transmission Interconnection Code in order to facilitate the integrated development
and operations of the power systems of EAPP and EAC countries. EAPP – EAC contains the
institutional capacity building for the EAPP and EAC through training of counterpart staff. The
development of institutional capacity will enable EAPP/EAC to implement the subsequent
activities, including the updating of both the Master Plan and the Interconnection Code. The
EAPP - EAC covers the following countries in alphabetical order: Burundi, Djibouti, Democratic
Republic of Congo, Egypt, Ethiopia, Kenya, Rwanda, Sudan, Tanzania and Uganda.
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4 Implementation of the Sector Strategic Plan
4.1 Background and implementation plan
Energy sector is the widest and the most controlling sector given its systemic link and influence
on the performance of almost all the sectors of the economy. The sector covers electricity
(hydrological resources, solar, methane gas, peat resources, geothermal, waste-to-energy and
wind-still unexploited). However, the sector goes beyond electricity to include other sources of
energy like biomass (biogas, bio-fuels and charcoal) and oil products (petroleum, kerosene, LPG
and natural gas). The sector is strongly linked to other key sectors like transport,
manufacturing, agro processing, mining and others. Further, as government tries to modernize
other sectors, , it will be paramount to supply sufficient, reliable and affordable supply of
energy products to end users.
Implementation of this energy sector plan will be done prudently to a void significant
disruption to the entire economy. Further, this will be a joint effort of all key players from
policy makers, investors and financiers. Some of the challenges to the implementation of the
energy sector strategy include issues of coordination given the complexity of the sector (from
petroleum to biomass), financing requirements, exogenous forces (price fluctuations) and
others. The basis for this strategy though is to create an elaborate approach of remedying these
current and future anticipated challenges. An energy SWAP secretariat was created to that
respect to ensure coherence and synergy, ensure cross-sectoral collaboration, bridge all key
sector players in consultations on strategic actions required for the sector to grow. The sector
Wide Approach Secretariat (SWAP) is charged with ensuring the realization of cross-sectoral
coordination and collaboration with in the energy sector.
The process leading to the development of the Energy Sector Strategic plan was of a
consultative nature. All the key stakeholders both private and government were exhaustively
consulted and their decisions and ideas form the basis of this strategy. During the strategy
development process, majority of stakeholders were practically involved in the entire exercise
from the start to ensure a sense of ownership of the ideas and commitments reflected herein
this strategy. This participatory approach has and will be maintained during the implementation
and monitoring and evaluation phases, hence recommending the need to further strengthen
the SWG and TWGs approach. As mentioned, key stakeholders will keep in the loop through the
implementation process with the SWAP secretariat on the lead and the SWG playing its usual
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oversight role. For matters of clarity, some of the institutional members of the Sector Working
group are enlisted below;
The lead Ministry-Ministry of Infrastructure
The Lead Donor
Prime Minister’s Office
The Ministry of Finance and Economic Planning (MINECOFIN)
Provincial and Kigali city representatives
Development Partners(DPs)
Civil Society Organizations
Private sector institutions
4.2 Sequencing of interventions
As described in chapter 3.
4.2.1 Roles and responsibilities of energy sector partners and stakeholders
4.2.2 The role of Central Government
Central government covers government Ministries, autonomous and semi-autonomous institutions, government Parastatals and implementing agencies. The leading Ministry for this case is the Ministry of Infrastructure. Ministry of Infrastructure Ministry of Infrastructure (MININFRA) is the lead Ministry and is charged with elaborating an enabling policy, legal and regulatory framework within which sector activities will flourish. MININFRA will offer Policy over sight, political guidance in the preparation and implementation of the energy sector budget, lead in the sector resource mobilization together with the Ministry of Finance and Economic planning. MININFRA will ensure the provision of technical guidance on engineering aspects, support the development of the necessary infrastructure, and structural integrity of downstream petroleum facilities. Specific energy related roles of the Ministry of Infrastructure are summarized below;
To develop institutional and legal frameworks, policies, strategies and master plans relating to the energy sector
To initiate the development of national energy infrastructure
To initiate, and monitor the supppy of sustainable power generation facilities and uninterrupted energy for the country and the region
To design and implement programs to enhance human resource capacities in the entire energy sub-sectors
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To supervise, monitor and assesss the the implementation of national policies and programs on matters relating to energy,
To lead in resource mobilization and partnerships in the area of energy at a national and regional level
Energy Water and Sanitation Authority (ESWA) Following law No 43/2000 of 7/Dec/2010, the two National Parastatals in charge of energy and
water distribution (RECO& RWASCO) respectively were merged into one multipurpose
authority in the names of EWSA. According to the law above, the mission of EWSA is to
implement government policy for developing energy, water and sanitation sectors through the
coordination, conception, development, monitoring and evaluation of the actions and
programs that are within the framework of its mission. Specifically on energy, EWSA’s key roles
include the following;
Coordinating the implementation of all activities related to and programs aimed at development and exploitation of energy sources,
Protection of Lake Kivu and its shores, the lake environment( people and animals plus aquatic life) residing around it during and after Methane gas extraction activities,
Ensuring proper management of electricity infrastructure, gas and petroleum products.
Coordinating activities and programs aimed at promoting and exploiting energy resources in the country;
Conducting analytical studies on energy supplies and demand, evaluation and programming of actions for energy sector activities.
Organising sensitization campaigns for consumers of energy in all its forms to boost products demand
Ministry of Commerce (MINICOM) The Ministry of Commerce will mainly take a lead on the development and implementation of the downstream side of the petroleum subsector that is part of the entire energy sector. MINICOM is specifically, charged with the following;
Formulating and overseeing the implementation of the downstream petroleum policy.
Establishing and developing downstream petroleum related legislations
Promoting and building durable petroleum energy sector resource capacities
Promoting the development of petroleum infrastructure and a competitive economy in line with the goal of this policy.
Adjusting institutional framework conditions to meet any emerging changes.
Promoting a guided development of a petrochemical industry in the country
Assessing and communicating petroleum demand and supply requirements
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Ministry of Natural Resources (MINIRENA) The Ministry of Natural resources will proactively engage and influence other ministries to
follow and comply with environmental concerns during energy related investments like
assessments of the potential impacts of developing energy resources on the environment.
Rwanda Natural Resources Authority (RNRA)-An autonomous authority under the
Ministry of Natural Resources that is in charge of management of Rwanda’s natural
resources(hydrological resources, land, forestry, etc). It is entrusted with
supervision, monitoring and implementation of all issues relating to promotion and
protection of the above natural resources. RNRA will also provide technical services
in the Upstream Petroleum activities; promoting Rwanda’s petroleum prospects,
supporting the work of International Oil exploration companies in Rwanda, and
monitoring their activities to conform to relevant contracts with GOR
Rwanda Environment Management Authority (REMA) - REMA leads in ensuring that the relevant environment regulations in relation to the upstream petroleum sector are in place and that the same are adhered to. A framework including monitoring and evaluation of oil companies operating will be crucial and REMA will monitor project implementation to ensure compliance to environmental standards.
Ministry of Local Government (MINALOC) - The Ministry of Local Government being the lead
ministry in promotion of decentralized services delivery will help in promotion of improved
rural based energy technologies like improved cooking stoves, biogas digesters and other
energy initiatives targeting rural areas. Further, MINALOC will speed up the implementation of
the National settlement program (“umudugudu” settlement schemes) that is targeted to
reduce the cost of electrification per household.
Ministry of Finance and Economic Planning (MINECOFIN) The Ministry of Finance and Economic Planning will ensure the provision of necessary funding to support undertaking of the responsibilities for the different Ministries that are party to the energy sector and operational/managerial agencies arising out of this policy. Most importantly, as an example in this case, MINECOFIN will fund the securing of national strategic reserves of 1 month equivalent of consumption and hospitality fees for the 3 months reserve requirement by the private sector in line with the petroleum Downstream policy. MINECOFIN will fund the government strategic reserves and any related replenishments under progressive budget commitments or other modalities as may be found to be appropriate (see page on petroleum for details)
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MINECOFIN will provide strategic guidance to the national development planning processes and lead the resource mobilization and allocation process. MINECOFIN will also provide for any necessary incentives for the private sector to carry out petroleum exploration activities under the upstream petroleum policy. With respect to planning and resource allocation, MINECOFIN will assist to link the upstream petroleum strategic outcomes with the EDPRS and higher level plans. It will facilitate resource mobilization meetings with development partners and approve new innovative financing mechanisms for this strategy. It will ensure that key ministries with upstream petroleum responsibilities prioritize and allocate sufficient funds to upstream petroleum activities.
RURA-Rwanda Utilities Regulatory Authority is responsible for licensing investments into construction of power projects and petroleum infrastructure like fuel storage facilities and filling stations. This is jointly done with the Ministry of Infrastructure. RURA will ensure that the operations of oil exploration companies comply with set national standards (upstream) MINEAC-The Ministry for East African Community Affairs is a coordinating body for EAC and Rwandan priorities within EAC Protocols, Treaties, Strategies and so forth. MINEAC follows commitments signed by Rwanda on energy projects and ensures Rwanda and Partner States deliver to these commitments. As the regional integration process intensifies over the next five years, the role of MINEAC in the energy sector on regional projects will become more important. Towards the end of the EDPRS II period, a larger proportion of energy will be sourced from joint regional projects and transmitted through EAC-funded transmission lines. It is therefore important for MINEAC and MININFRA to work together to ensure these come on line in a timely and efficient manner to assist in achieving the national energy goals. Additionally, there are alternative sources of funds available for regional projects that can be examined over the next five years. The Local Governments Local governments have the authority and the mandate to implement discrete enabling policies
that Drive Rwanda’s economic transformation. The local government will ensure that all the
guidelines and directives from the central government are fully disseminated to the country
side. Local Government Authorities under decentralization policy have direct responsibility for
all decentralized services, including ownership and use of energy products. With increased local
government finance through the CDF and through direct transfers, local authorities have
considerable resources to finance their DDPs and Performance Contracts (Imihigo) and energy
products are part of these obligations.
EWSA’s utility programs are seeking to target the communities and sectors for the greatest
efficiency opportunity and to cost-effectively scale up programs to serve more end users of the
energy products.)
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4.1.1 The Private sector The private will be responsible for undertaking investments into the sector through IPPs or Joint
ventures with government where the engagement manifests proven value-for-money. For the
petroleum subsector, private investoprs will be requested to carryout actual exploration work
at their cost, however, recoverable under the PSC. There is therefore need for effective and
efficient cost tracking mechanism. More specifically, the private sector will be responsible for
the;
Establishment of energy generating and supplying projects like power plants,
strategic storage facilities, filling stations, biogas digesters, solar systems as well as
LPG supply chains.
Research in petroleum exploration studies and commercial development.
Technology improvements in exploration, exploitation and maintenance.
Managing all the energy products supply chain
Financial institutions and Development partners
Financial institutions and development partners have a critical role to play in the energy sector.
Financiers and development Partners (DPs) will offer financing opportunities to energy
entrepreneurs, energy end users (like credit on domestic biogas users, etc). Detailed roles of
the financiers and development partners are outlined hereunder:
Provide required financing to energy investors;
Offer reasonable guarantees and risk insurance to potential investors into the
sector such as PRG and MIGA offered by the World Bank.
Support research and feasibility works undertaken by either government or the
private sector to prove energy resource potential.
Provide technical support to both private and public institutions engaged in
development of energy resources(support to capacity building initiatives)
Support technology transfer through recruitment of international experts to train
Rwandans on modern technologies of developing energy resources in a
sustainable manner leaving local ready to replace them successfully.
Research and Educational institutions Research and educational institutions will work together with MININFRA to promote the best
utilisation of energy resources in a sustainable manner. With the help of the National Institute
of Statistics of Rwanda, research and academic institutions will collect and analyse energy
related data, make situational reports and propose recommendations to guide future policy
making.
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Rwanda’s research, educational, training and technology institutions (including IPAR, NUR, and
KIST, IRST, ISAE and others) will need support to research on energy resource development
technologies, measures for improvements to meet best practice and issues of sustainable
energy resources development. These institutions will adapt their training programs and
capacity building to provide skills and knowledge in the implementation of the energy policy
and strategy.
Academic institutions like schools will work with MININFRA to ensure appropriate
implementation of the National Institutional Biogas program. Science and technology
institutions and universities in Rwanda have a key role to play in research and capacity building
for the energy sector. Government should instruct higher institutions of learning to revise their
curriculums and make them tailor made to provide students with sufficient knowledge on the
energy sector, modern energy technologies like hybrid wind/solar technologies, biogas digester
construction, assembling and maintenance of solar solutions, manufacturing of improved
cookstoves and efficiency technologies. To reach such objectives, training institutions should
stress on the following issues:
Adapt their curricula to peculiar requirements of the energy sector labor market.
This will be done through responsiveness to the needs of the private sector in
the recruitment of staff, development of course material, design of internships in
energy industry, and in the skills transferred to students;
Development of library and reference resources for researchers;
Provide assistance to students in their search for employment following
graduation;
The Civil Society The civil society will also play a vital role in support of implementation of the energy sector
Strategic plan. Civil society will majorly be keen on providing education, awareness and
advocacy campaigns as their key focus areas. One of the significant foras in which government
work with the civil society is through the Energy Sector Wide Approach (SWAP) secretariat
chaired by the Lead Ministry deputized by the lead donor for the sector. Civil society through its
umbrella organization called Rwanda civil society platform with over 15 member organizations
would be expected to actively participate in advocating, supporting and promoting productive
use of energy resources and advocating for quick service delivery to the citizens. Specific roles
of the civil society herein in this strategic plan can be summed up into undertaking policy
advocacy, energy education and people empowerment.
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The Media The media has played and will continue to play a crucial role in raising public awareness of
efficient energy consumption practices and adoption of modern and more efficient
technologies as well as reporting on energy related local concerns where necessary. The media
in Rwanda can be effective agents of change, especially as mass media (particularly radio)
remains the main source of “authentic” information from government to the residents.
The Initial target groups for awareness and sensitization in the residential sector forexmaple
could be high-end consumers whose homes or apartments use substantial amounts of energy
in heating, cooling and lighting. The mass media (print, broadcast, and others) will be effectively
mobilized and empowered with the knowledge, skills and information for effective, accurate
and regular energy market reporting to communicate government programs to the end
beneficiaries. Areas of intervention by the media fraternity include the following;
Providing awareness programs for the population;
Undertaking press coverage for energy efficient campaigns, covering special events like
investments foras, energy weeks, etc.
Spreading by air or by print press forest policies and legislation clipboard on energy
resources. This will be supporting susutainable use of biomass.
Collecting and disseminating information on the energy products market and new
technologies on the market such as improved cooking stoves, biofules, etc.
4.2.3 Mechanisms for co-ordination and information sharing
SWAP secretariat: A focal point for government-donor coordination. The secretariat will ensure effective communication between government and development partners and keep records of the SWG members.
Joint Sector Reviews and Energy Sector Working Group: A forum under which government meets energy sector stakeholders to deliberate on matters affecting the sector. The sector working group meetings review past sector progress presented under backward looking joint sector review reports and agrees on plans going forward(Forward looking sector reviews).
Joint Delivery Committee: An inter-ministerial Committee chaired by the office of the Prime Minister to discuss measures to unblock potential contraints curtailing projects delivery. This commiiteee will coordinate government ministries responsible for energy sector development and give political guidance on resolution of key issues affecting the sector.
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5 Monitoring and Evaluation
This section aims to describe mechanisms for systematic gathering of sector information and
data on specified indicators to inform management and the main energy sector stakeholders of
ongoing energy sector operations and the extent of conformity or not to the desired
commitments. The section also reports on the extent of progress and achievement of results in
the use of allocated resources for the energy sector investments. The objective of this will be to
determine the relevance and fulfilment of objectives, as well as efficiency, effectiveness and
sustainability of commitments reflected herein this strategy.
High level monitoring of the energy sector performance in line with the EDPRS II energy related
targets will be jointly done by the Ministry of Infrastructure closely wit thye Ministry of Finance
and Economic Planning. (MINECOFIN). For the energy sector, this will primarily involve tracking
two main performance indicators(the generation capacity towards the targeted 563 MW and
45% grid access to electricity by 2017 with Minecofin concentrating on the government
financing obligations for the underlying energy investments.
MININFRA is responsible for detailed Monitoring and Evaluation of the programs, projects and
activities required to achieve commitments reflected herein this sector strategic plan.
Procedurally, the Ministry of Infrastructure will monitor and evaluate sector performance
progress as compared to set targets through the following steps;
Scrutiny of the evolution and reporting on the performance indicators overtime
Examination of progress and drawing of conclusions for further policy reviews
Incorporation of observed occurrences and conclusions reached into future policy
reviews to give new direction to the implementation process.
Note: There is an established Management Information System(MIS) under EWSA. A
comprehensive database as well as an effective Management Information System(MIS) will be
vital for effective monitoring and evaluation. The MIS is responsible for planning, directing and
coordinating the energy information systems for the sector as a whole. The office will need
more capapcity to deliver and report on time.. In related development, a Monitoring and
Evaluation tool has been developed and is currently used by MININFRA and EWSA to track
weekly progress of energy sector projects.
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5.1 Energy Management Information System
Following the recommendations of the last ESSP, a database for energy Management
Information System Was put in place at EWSA to support planning, monitoring and evaluation
of the energy sector. Efforts are currently being made to develop sustainable data collection,
reporting and quality assurance mechanisms and provide training to all the stakeholders
involved in system operation, including particularly the primary data providers. The energy
sector Management Information system looks at:
Development of an energy sector baseline database, annually updated
Maintenance of a comprehensive set of statistics on energy which will be useful for
researchers and policy makers
Designing and implementing a system of planning, monitoring and evaluation of the
financial status and physical progress of energy projects
Creating a system to give regular, comprehensive reports on the execution of the Energy
Sector Strategic Plan (ESSP) for 2013/2017
Results based management will be used to monitor and evaluate the activities planned herein the energy sector strategic plan. Results-based monitoring is a continuous process of collecting and analyzing information, comparing actual results to expected results in order to measure how well a project, program or policy is being implemented.
Results-based evaluation is an assessment of a planned,ongoing, or completed intervention to determine its relevance,efficiency, effectiveness, impact, and sustainability. The intention is to provide information that is credible and useful,enabling incorporation of lessons learned into the future decision making processes. This approach will provide crucial information about energy sector performance and help policy makers understand whether or not promises were fulfilled, providing a view over time of the status of a project, programs and implementation of enegy subsector policies.
Results based Monitoring and Evaluation will be undertaken based on the following key steps;
Conducting a Readiness Assessment
Agreeing on Performance Outcomes to Monitor and Evaluate
Selecting Key Indicators to Monitor Outcomes
Baseline Data on Indicators
Planning for Improvement(Setting realistic targets)
Monitoring for results as planned
Clarifying the role of Evaluations
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Reporting Findings
Using Findings Sustaining the M&E System Within the Ministry.
Sector Performance reviews-Energy Joint sector reviews will be held semi-annually to assess
progress on the achievement of targets set herein and agree on the sector plans and
commitments going forward. Key information on energy sector performance and EDPRS II
related indicators will be shared with the stakeholders as a form of accountability and
information sharing responsibility. EWSA will work together with the National Institute of
Statistics to ensure compatibility and synergies between the National data collection surveys
and the web based Management Information system.
The sector MIS will inform coordination foras such as the Energy Sector Working group(ESWG),
Thematic Working Groups(TWG), The Development Partners Coordination Group, Joint Delivery
Committee(JDC) and Cabinet on the developments into the sector and key challenges that
require political guidance. Below is an outline of key institutional stakeholders that will be
involved and pray a significant role in the implementation of the energy sector strategic plan;
5.2 Evaluation
Evaluation is the systematic assessment of the substance or merit of the project or program.
This note serves to highlight the need for and the process of ensuring that there is results based
evaluation at all sector levels. Standard evaluation and reporting formats will be drawn up and
agreed upon between Districts and the central government lead by MININFRA. Regular sector
reviews will be organized internally and with other partners, particularly in the EDPRS thematic
working groups to evaluate sector performance in line with commitments reflected herein.
The objective of this section is to give guidance on the future assessment of how the energy
sector strategy will have been implemented. The evaluation process will include ongoing
monitoring of trends that may be impacting the progress of implementing the plan or lack of
progress towards the goals. The process will entail;
Identifying individual goals and objectives that are progressing well according to
the plan, and those that are falling short, and suggesting any actions or
adjustments that may be needed for the energy sector strategic plan to succeed.
A final evaluation will be done after implementing the strategic plan to
determine overall success and impact of the strategy on achieving EDPRS II
objectives.
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A clear evaluation plan will include; who is responsible for reporting, gathering,
and evaluating data, data collection measures and timeline for completion of the
exercise.
5.3 Communication
So as to improve the implementation of the ESSP issues arising from the evaluation process
which requires redress will immediately be dealt with inside MININFRA and/or communicated
to relevant parties outside the Ministry through the Sector Working Group. EWSA, given its
leading role in projects and programs implementation follow-up will be particularly resourceful
in this respect. For the next 5 years (2012/2017,) MININFRA will be responsible for regular
communication of progress and reporting on the status of implementation of the Energy
projects, to the sector stakeholders. Specifically, this will be done through the ways highlighted
hereunder
Regular meetings will be held with the Energy Sector Working Group, which will
participate in joint reviews of performance of the sector
MININFRA website will be updated quarterly , with significant information about the
Strategy and key sector achievements, opportunities as well as plans in pipeline,
accessible to the public
Local media (newspapers, radio and television) will be used to communicate about the
Strategy and state of the sector. This will be partly meant to raise mass awareness on
new sector initiatives such as energy efficiency technologies.
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6 Cost and Financing
Total financing: Total financing requirement for 5 year (2013/2017) energy sector plan
including generation, transmission and access program as well as petroleum and biomass
energy is estimated at US$ 2.847 billion (Frw 1.708 trillion) as summarized in table 13 above. Of
the total financing requirements, total public funding requirements including donor support is
estimated at US$ 1,551.2 billion(54%) while the remaining US$1.295 billion(46%) is planned to
be generated by the private sector.
Expenditure on electricity: Total expenditure on electricity investments alone is estimated to
take close to 97% of the total energy sector capital expenditure. The remaining 3 percent is
shared between biomass and downstream petroleum activities. Expenditure under biomass
energy resources will mainly be directed to meet the cost of subsidy16 for the installation og
biogas digesters as well as awareness and sensitisation programs.
Petroelum: Under down stream petroleum subsector, government through the Minstry of
infrastructure is in charge of managing petroleum storage infrastructure. As already noted in
this document, to ensure security of supply, government plans to have storage facilities capable
of storing 5 months consumption equivalent of petroleum products by 2017. The petroleum
downstream policy requires to keep 417 months consumption equivalent as reserve for
commercial and strategic purposes. Government will therefore need to secure and prepare
enough land for this infrastructure. The US$ 4.5 million budgeted is meant to pay hospitality
fees for private storage of government fuel reserves and maintenance of petroleum storage
facilities. See Annex 2 on financing for details
16
Government policy is to provide a flat subsidy of 300,000 to whoever is installing abiogas digester. 17
3 months fuel consumption equivalent will be kept by the private sector while 1 month will be kept by government
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Annex 1: Generation Investment Roadmap
6.1 Peat-to-Power Generation
A Peat master plan was developed in 1993 which indicated that we have the potential to
develop around 700MW of generation from our Peat resources. This study however was
undertaken at a high level based primarily on a small number of samples and desk based
research. The study does not constitute a basis on which to undertake multi-million dollar
investments in generation and significant time and finance must be dedicated to developing a
full understanding of Rwanda’s peat resources if we are to avoid the pitfalls outlined on the
previous page. Time and finance to undertake such studies has been factored into our planning.
A map outlining the current understanding of Rwanda’s peat reserves can be found at the end
of this section.
The table below outlines peat projects planned to be implemented over the EDPRS II period to
deliver the demand driven roadmap.
Hakan (100MW) expected to deliver in 2017
Gishoma Peat to Power (15MW) expected to deliver in early 2014
Small Peat (3* 15 MW) to deliver at the end of 2015, mid 2016 and the end of 2016.
100 MW of additional Peat generation expected to be delivered via a PPA 2017.
Implementation is already underway for the Hakan and Gishoma plants so we will focus our
discussion on the small peat and additional 100 MW plant.
Small Peat (3*15 MW): As illustrated in chapter 3, the need for additional generation
capacity is likely to be most pronounced over the next 3 years and so herein this
document is the proposed plan to accelerate delivery of additional peat generation. We
propose to undertake feasibility studies and prepare / drain our own peat bogs as a
critical path activity in Peat Generation development. This can take place in parallel with
sourcing the necessary private sector investment. If the two were to take place in
sequence, the project would likely be delivered at least one-year later. It would also
help us to better understand our peat resources and ensure any future engagement
with the private sector makes best use of our limited resources.
Hill top and hill side peat bogs are the quickest to develop as the topography of the land
provides natural drainage. It should be possible to prepare such sites within around 2-years of
completing a full feasibility study. In early 2013, we will have completed pre-feasibility studies
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on 7 such sites (one has already been completed and suggests the site is suitable for a 15 MW
plant). We anticipate at least 3 of these sites being suitable for developing small scale (15 MW)
generation as earlier proposed.
Once a site is prepared, it is necessary to harvest the site for around 6-months to build up
sufficient stock pile of peat for generation. Our current view is that this harvesting / peat
mining should be undertaken by the private sector and if possible the same party that will
develop and own the power station. There are clear benefits to keeping the supply chain intact
as each interface between companies poses additional risk.
100 MW of additional peat generation: Following the conclusion of the PPA with
Hakan, there is considerable private sector interest in developing generation from our
peat reserves. Based on the expressed interest, we propose to initiate a competitive
tender for a private sector developer to develop and operate mining and generation
infrastructure to provide an additional 100 MW to the grid. We have a number of
potential sites including the Akanyaru and around Akagera. As a priority, government
must conclude feasibility studies in these areas before progressing to competitive
selection of a private partner. The timelines for this are outlined on the gant chart on
the following page.
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Figure 18: Peat to Power projects delivery plan
Assumptions: Publicly Funded activities: Hiring of International Experts: To coordinate the peat testing, and any public peat mining we would need international expertise; we have assumed 2 experts @ $250k p/a for 3 years. Sampling and testing:
Sampling: For 25 MW of generation capacity you will need approx. 1500 Ha of land. Sampling every 500m would require 77 samples. Sampling every 200 m would require 416 samples. We will assume 200. 2 People could take 10 samples per day or 50 per week. therefore a team of 8 samplers could take all samples in a week. Additional staff to transport the samples to the testing site are required. We assume it would take around one month to prepare the site for sampling. Testing: Each sample is a vertical sample going down approximately 4 meters; a test needs to be done on each meter. Therefore 800 tests need to be completed. Each test would take approximately 1/2 a day. In total to complete the tests with 20 ovens would take 4 weeks or one month. Testing can begin in parallel Costs for feasibility studies are based on 30 people at $1000 / month.
Lab Equipment: Our $0.5m estimate includes the purchase of 20 ovens for testing the peat samples, 10 sampling rods and 3 trucks and premises for the laboratory. Public / Private Partnership: Peat Drainage To expedite Peat Mining and to ensure GoR maintain control over this valuable resource we are proposing the establishment of a state-owned peat company. The costs oan the Peat Mining operation include the capital costs of the peat mining equipment as well as the staff costs during the bog preparation phase. We have assumed it would take around 27 months to prepare a bog in advance of power generation. Note the peat mining operation would be Private Finance: Power plant construction: Once the resource has been proven and a commitment has been made by GoR to mine the peat through a state owned peat company the risk for the private sector should be significantly reduced and we could sun a competitive process to select a partner with whom to enter into a PPA. We propose undertake a 3 month tender process and then allow the selected partner 2-years to construct the power generation plant.
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6.2 Hydro power generation
Hydro power, where correctly sited, can deliver an economic supply of base-load power. We plan to develop around 70 MW of domestic Hydro projects between now and 2017, as illustrated in the roadmap at the start of this chapter. As with peat, the individual nature of each Hydro site necessitates a feasibility study be carried out in advance of development or contracting with the private sector. The table below outlines the projects we propose to undertake during te EDPRS II period:
28 MW from Nyaborongo to deliver in 2013/14 and 2014/15, 14 MW in each period.
5 MW of additional generation from Rukara in 2014/15
32 MW from small scale Hydro for which feasibility studies will complete in 2013 (2015 – 2018).
Projects under implementation/contracted: Nyabarongo, the Micro-hydros, Giciye, and Rukarara V are all either under implementation or we have already signed a PPA. EWSA and the Ministry need to ensure these projects are delivered on time. Potential projects for competitive tendering: Feasibility studies are currently underway on a number of projects identified through a Hydro Atlas which was complete in 2008. These studies are expected to be completed in 2013. Upon their completion we will undertake a competitive process to identify a private sector partner, as outlined in chapter 3. Possible addition of Nyabarongo II Multipurpose Dam: A feasibility study was undertaken in 2007 which proposed the placement of a dam along the Nyabarongo River approximately 30km North East of Kigali. The projected cost of the project was significantly above the benchmark for a hydro project purely for electricity generation. The development of the site is however likely to generate other benefits such as irrigating local land to increase the agricultural yield and supplying drinking water. A full feasibility study is currently underway which will be reported this year. Based on this feasibility study we will take a decision on whether the project should go ahead and how the costs can best be shared between the water and electricity consumers and the beneficiaries of the newly irrigated land.
6.3 Methane gas-to-power generation
The reserves of methane held in suspension within Lake Kivu represent a significant natural
resource which can be used for the generation of electricity. In 2013/14, we expect 25 MW of
new generation to come online through the KivuWatt project. In addition to providing much
needed additional generation, this will prove the technical feasibility of extraction and
generation at this scale. The table below outlines the projects which we will need to achieve
over the following 5-years:
25 MW from KivuWatt I in 2013/14
50 MW of additional Methane in 2016/17. The partner will be selected via competitive process.
3.6 MW from the rehabilitation of REC generation plant in 2014.
2
Feasibility work: Whilst we expect the commissioning of the KivuWatt plant early in 2013 / 14
will go a long way to proving the feasibility of lake Kivu methane gas, we also propose to fund
a wide ranging pre-feasibility study to identify the range of opportunities available for
investors, assessing projects of differing sizes and based on different technology types.
KivuWatt: KivuWatt are due to deliver 25MW of generation in 2013 / 14; once this has
been demonstrated to be successful, we could partner with them to deliver an
additional 75 MW
REC: We are currently looking for technology providers and investors to partner with
us to rehabilitate our REC generation plant.
50MW of additional generation: We consider it could be possible to attract additional private
sector interest to construct 50MW of additional methane capacity, and in early 2013 launched
a competitive process through which we will select a private partner.
6.4 Geothermal power development
Geothermal energy is a clean and reliable source of energy, which is not affected by short-
term fluctuations in the weather or world producer prices of oil. Most of the geothermal
plants when installed have relatively very low maintenance costs and high availability.
Geothermal energy is not dependent on whether it is day or night as solar energy is, or
whether the wind blows strongly or not. We will give the development of our Geothermal
Resources the highest priority over EDPRS II period.
10 MW from Test Generation site at Kinigi
10 MW from Test Generation site at Karisimbi
50 MW of production scale generation at Kinigi / Karisimbi
Feasibility and our Resource: Based on surface studies we have identified three sites with
geothermal potential. The most promising of which are Karisimbi and Kinigi where it is likely
we will discover a commercially viable geothermal resource18 for power generation using
either binary or condensing steam turbines. A summary of our possible geothermal resources
is detailed in the table overleaf:
18
As verified by an international expert in Geophysics employed by EWSA.
3
Table 13: Potential areas with for geothermal resources Geothermal Prospect Karisimbi Gisenyi Kinigi Bugarama Other areas Total
Resource Area (Km2) 25 30 25 50 20
Developable area (Km2) 8 5 5 2 2
Number of wells per Km2 10 10 10 10 10
Average well productivity (MWe) 4 4 4 1 1
Resource potential (MWe) 320 200 200 20 20 760MW
Completed work Surface studies
Surface studies Surface studies No surface studies No surface studies
Next steps Infill studies, infrastructure, exploration drilling, production drilling & power plant construction
Recon surface studies
Recon surface studies
Surface exploration Costs (US$) 900,000
Complete
900,000
Complete
900,000
Complete
1,400,000
Not started
200,000
Not started
4.3m
Infrastructure costs (US$) 2,000,000 2,000,000 2,000,000 1,400,000 600,000 8.0m
Water supply 5,000,000 2,000,000 2,000,000
Exploration wells (3 wells) 21,100,000
21,000,000 21,000,000 21,000,000
Well Testing (3 wells) 120,000 120,000 120,000 120,000
Production wells The cost of production wells same as exploration wells but costs can be reduced if Rwanda owns rigs
Power plant Estimated cost of US$ 2,000 to 3,500 per Kw installed for commercial plants
We will start drilling in Karisimbi in 2013 and, assuming a commercially viable resource can be
found intend to progress to production development immediately. The costs of exploratory
drilling in all three sites are likely to be around $100m. We propose that the private sector
undertake both production drilling and generation.
A detailed Geothermal Strategy and Geothermal Act have been developed which will both be
formally approved
4
Annex 2: Summary of costs and required financing
5
6
7
Annex 3: Monitoring and Evaluation Matrix
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