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Engaging private sector in solving energy puzzle

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Rwanda targets to jump from 112MW in 2013 to 540MW in 2017 and 1000MW in 2020

In order to improve the export value and thus cover the trade deficit that burdens Rwanda’s economy to date, there is a great need to boost local manufacture so as to increase the quantities of finished goods ready for the market plus enhance high quality production. By and large, getting the local manufacturing sector to reasonable production potential requires among others increasing access and affordability of energy.

According to recent surveys by the Private Sector Federation of Rwanda, most businesses mainly in the manufacturing sector have highlighted inadequate electricity supply as a major hindrance to increasing their production potential while to many other manufacturers in the region, this bottleneck is what limits them from opening factories in the Rwanda despite an attractive market and business environment. This concern too is acknowledged by the government. “We know how much the limited availability of electricity hinders the manufacturing sector and business in general and we are working towards addressing this challenge,” State Minister of Energy in the Ministry of Infrastructure Hon. Emma Francoise Isumbingabo scored in a recent meeting in Kigali.

Save for the state Minister, President Paul Kagame has on several occasions aired a similar concern calling out to the entire government to prioritize solving the energy puzzle arguing that it is only through achieving the energy targets that the country can be to attain its set economic goals. Thus the harmonized value attached to the energy challenge can be said to have led to setting of ambitious targets like that of increasing production to 1000MW by the year 2020. In order to attain this, the government divided the set goal in mini visions one of which requires that energy available on the grid be raised from the current 112MW to 540MW by the year 2017.

To many, set targets are overwhelming if compared with the available potential to deliver on them. However, a keener analysis of what has been done so far, demonstrates that a lot has been achieved in the energy sector and the primary achievements so far can result into generation of the envisaged amount of electricity to boost national economic growth and development.  In fact if the implementation phase of all the designed projects goes according to plan, it would not be a surprise if targets are hit earlier than had been expected. For instance in the energy roadmap to 2018, Rwanda targets to produce 310MW, 300MW, 200MW, and 232MW from Geothermal, Methane gas, Peat-power and hydro power generations by the year 2017. And indeed making such a jump in energy production is not a simple pie to bite for besides being highly costly; energy generations require a lot of skills in order for them to be successful.

Thus for the government of Rwanda to achieve the set goals and deliver to Rwandans, moves have been made in the recent past to ensure that the energy puzzle is completed; connecting one dot at a time but at all times ensuring that whatever is connected does not lose the next minute. “As an initial step for solving the puzzle, the Government endeavored to clearly understand the challenge and set the goals that are achievable in regards to solving them,” the Director General of Energy Water and Sanitation Authority (EWSA), the publicly owed and sole distributor and manager of the electricity and water utilities in Rwanda, Ntare Karitanyi offered.  Clearly recent developments in the energy sector show that the designing process of plans on where how to generate electricity fitted one big dot of the government realizing that the resources of finance and skills which the task of getting the required energy in Rwanda called for were not accessible in and thus there was adamant need for partnerships.

And the realization led to the development of the strategies on how to lobby foreign investors with the expertise and resources to enable the country generate energy from the available natural resources. Currently the plan seems to have worked for a good number of investors have come into Rwanda to offer expertise in resource mobilization for energy development and provide the required skills. Also at the onset of the involvement of the private sector in energy generation, the government of Rwanda designed tariffs for the wholesale of energy to the national grid referred to as the “feed in tariffs”.

The tariffs were meant to drive private investments in the energy sector by giving assurances on market prices of their product upon generation. Such efforts coupled with relentless marketing campaigns by the Rwanda Development have resulted into increased investment. For instance, the recently signed contract between the government of Rwanda and an Indian firm, Punj Lloyd confirms 100 percent possibility for the achievement of generating 200MW power from peat; with Punj scheduled to produce 100MW early 2017 in addition to the Hakan Mining and Generation Industry and Trade’s deal that was signed in the last half of 2012 expected to generate another 100MW in the same period. However Rwanda estimates it has reserves of 155million tons of dry peat, about three quarters of which is found near the Akanyaru and Nyabarongo rivers and the Rwabusoro plains. The later is enough to produce over 450MW of power for 25 years hence increased negotiations with private firms would see the country exceed the targeted 200MW production in peat by 2017.

Also, the government has already set aside about US$27million for the exploration process of three geothermal wells that will later be drilled. The wells are theoretically expected to have a potential of generating over 780MW of energy. “When it comes to geothermal,” former EWSA boss Yves Muyange offered, “the challenge is to know how much the country’s reservoirs have. After ascertaining this and making sure that the profits of drilling the wells would overcome the investment costs, it will not take long before it is transformed into energy.” It implies that being ready to explore the wells is one of the last stages in producing energy from them considering that preliminary tests prove that there is a high possibility that Rwanda’s geothermal wells might even exceed the theoretical expectations.

Similar moves of involving the private sector in hydro power and methane gas generations are giving results that are meant to see Rwanda address her energy puzzle. Consequently, solving a puzzle is never a simple game and not one that can be done overnight more so if the yoke that needs to be broken requires over US$5billion for a developing country such as Rwanda to tackle. However drawing from past experiences with Rwanda when it comes to achieving goals, such as having been able to solve the post-genocide justice puzzle, there are facts enough to rest upon that the energy challenge which is the highest bottleneck of the country’s manufacturing sector will be cracked and more so set targets exceeded.

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