The Rwanda Energy Group Limited (REG) is committed to ensuring world-class standards in development and operations in Rwanda’s energy sector. REG was formed as corporate structure in July 2014 to take over the Energy operations formerly carried out by the Energy, Water and Sanitation Authority (EWSA) a government authority combining energy and water services.
Rwanda Energy Group Limited has two subsidiary companies, the Energy Utility Corporation Limited (EUCL) responsible for generation, transmission and distribution of electricity while the Energy Development Corporation Limited (EDCL) carries out the development of generation, transmission and energy access projects.
The Chief Executive Officer (CEO), Jean Bosco Mugiraneza explains that the mission of Rwanda Energy Group Limited is to transform Rwanda’s energy sector through effective governance arrangements, efficient operational performance, good customer service and increasing access to energy services.
In the short-term, REG has four main priorities in the reform process of the energy sector; implementing new group corporate structures and deploying skilled staff with supporting human resources arrangements in conjunction with KPMG Consultants aimed to drive corporate performance; verification and valuation of assets and determination of liabilities conducted by PWC in order to establish a definite starting financial position; installing an integrated information system to enhance operational control, effective data management and planning with the support of the World Bank and the Belgian Technical Cooperation; and reviewing energy tariffs based on refined cost structures.
Concerning tariffs, Jean Bosco Mugiraneza explains, “Investors point out that tariffs are high, so Rwanda Energy Group Limited is working with a Japanese company, WestJec, to develop a least cost energy development plan to facilitate the development of cheaper energy generation into the mix on priority basis. The Country currently obtains electricity from solar, hydropower, thermal, methane-gas plants and on a small scale through electricity imports. Now we are working to develop a medium term energy-generation mix that will help us moderate our tariffs. Thermal generation now accounts for 45% in our energy mix, these are costly petroleum fired plants; we plan to eliminate these by 2017”
Meeting the Challenges
Rwanda Energy Group Limited has a number of challenges to overcome as it reforms the energy sector. Jean Bosco Mugiraneza notes, “While we are implementing reforms, we must also keep the lights on with growing demand. Our other main challenge is to sustain the development momentum in order to meet the national strategic targets, which are to increase Rwanda’s installed energy capacity from the current 155 MW to 563 MW by 2017/2018 and to increase connectivity to electricity from the current 22% of the households to 70%. The Energy Development Corporation Limited has to harness all relevant technologies and sources of energy in order to reach these targets.”
Rwanda Energy Group Limited has to serve diverse Rwanda’s electricity customers, which include individuals, who pre-pay for electricity service, and companies and organisations which pay after consumption. Jean Bosco Mugiraneza says, “Our post-pay customers make up only 4% of our total clientele in numbers but contribute 60% of revenues for electricity use and their requirements are growing with the growing economy. We must raise up to the challenge of satisfying their needs and those of the incoming international investors.”
To reach its ambitious goals, Rwanda seeks to engage the participation of local and international investors supported by an enabling policy environment created by Government. As Jean Bosco Mugiraneza explains, “The government cannot single-handedly fund the huge projects required to a six-fold increase in the national installed energy capacity by 2017/2018. To this end Rwanda needs funds as well as skills to carry projects from feasibility studies through construction to commercial operations. Therefore, Rwanda has opened the national energy market to local and international investors through tenders, and there is commitment ensure that the tender process is transparent and fair to benefit energy users and the economy at large.”
Outstanding Investment Opportunities
Several energy projects in Rwanda offer outstanding potential for investors, including current tenders to develop 100MW methane-gas projects at Lake Kivu. One project in the area is KivuWatt Project, which will produce 25MW by Contour Global. Meanwhile a US enterprise Symbion Power is negotiating a 50MW project in the same area.
Investors can enter the Rwanda energy market as independent power producers, establish joint ventures and sign a 25-year power-purchase agreement with Rwanda Energy Group Limited that guarantees tariffs and the concession period. Jean Bosco Mugiraneza points out that hydropower projects also offer outstanding potential in Rwanda.
The reforms in Rwanda’s energy sector will achieve great progress very quickly. Jean Bosco Mugiraneza recognises that the energy sector has long-term horizon, however he quips, “In three years, Rwanda’s energy sector will be very competitive in the region. Tariffs will continue to drop as cheaper sources of generation come on board and efficiencies are gained in operations. Rwanda welcomes European and other international investors to benefit from this progressive policy and market environment to accomplish even more projects.”
Jean Bosco Mugiraneza, who was trained in the US, is very positive about Rwanda’s future. He says, “Rwanda has maintained GDP growth of 8.5% in the past few years and is aiming at 11.5%. Africa is rich in energy resources but poor in energy supply, and this presents enormous business opportunity for both local and foreign investors. Rwanda Energy Group Limited is ready to engage in strategic partnerships with investors in various forms and to help provide a safe and secure market for our future partners.”
