Private investors will rehabilitate, operate and maintain the facilities for 25 years to boost energy supply
The Rwanda government is leasing 15 micro hydro electricity generating plants to private investors as a way to improve their output and address energy shortage that the private sector says is undermining productivity. Under the privatization deal, the government will sign 25-year concessions with private investors to finance rehabilitation of the power stations, manage and operate them for the entire duration of the contract. An official at the Ministry of Infrastructure, the same docket under which the energy component falls, has told The Independent that the privatization process that is now at pre-selection stage aims at enabling the hydro power stations to operate optimally.
The plants of Gashashi I in Rutsiro, Janja in Gakenke, Nshili 1 and Nyabahanga in Karongi, Nyirabuhombohombo and Mukungwa in Musanze all with a combined installed capacity of 4MW (or 4,000KW). The others to be handed to private hands are Gisenyi, Keya and Gihira in Rubavu, Rugezi in Burera, Nkora and Cyimbili in Rutsiro, Rukarara II in Nyamagabe as well as Nyamotsi I and II in Nyabihu. These nine hydro power plants constitute some 10.78 MW out of the current total national total power production capacity of 160 MW.
Some of the plants, officials say, are in dire need of repair thus majority of them are generating far below their installed capacity. The government hopes they will be refurbished when placed in private hands. But some analysts are skeptical; saying privatisation of assets related to utilities has not been a successful in many parts of Africa. Kamayirese Germaine, the Minister of State in charge of Energy and Water, confirmed the transaction.
“All I know is that the deal is in form of leasing. For technical details refer to Rwanda Energy Group,” he said. The REG Chief Executive Officer, Jean Bosco Mugiraneza, was not available to comment.
Claire Akamanzi, the chief operating officer of the Rwanda Development Board told The Independent that they are currently in negotiations with the pre-selected companies.
“The process has not yet been finalised. So far none has been sold yet. The tender was launched and completed, and currently negotiations are going on with the preselected companies,” she said.
“The information about how much, the unit cost, or (who has taken what] will be finalized and available as the negotiations are concluded with successful bidders (Rwanda Mountain Tea, Prime Energy, RGE Energy UK Ltd and Energiotec Ltd),” added Olivier Ngororabanga, energy specialist at RDB said in an email.
“The government is not selling any plant, but we are rather handing over the management to private companies that will manage, operate and maintain them for a concession period of 25 years,” Ngororabanga said.
An online search shows that Prime Energy is involved in electricity business in parts of Europe, Middle East, Asia Pacific and Africa. It works in partnership with energy and utility providers, contractors, manufacturers, and government bodies within the energy sector, among others.
Rwanda Mountain Tea is a locally-owned firm in tea farming and packaging business. The company is not known to have stakes in energy business. And REG Energy UK Ltd is based in the United Kingdom and is involved in renewable energy business.
Documents calling for bids, copies of which The Independent has seen, indicate that government will enter contracts with qualifying independent developers to upgrade, finance, operate and maintain the plants under 25- year concession. Each developer will execute a Power Purchase Agreement (PPA) with Energy Utility Company Limited (EUCL) as sole off-taker and all power revenues accrue to the developer during the entire PPA duration.
“In return for using Government assets, the developer will share with the Government of Rwanda power revenues using a revenue sharing percentage which is one of the financial bidding variables…,” invitation to bid documents read in part.
The current power production in Rwanda is 160 megawatts and government plans to achieve an increase of 70MW by next year which will come from the completion of Nyabarongo II and a new peat power producer in Gishoma as well as from independent power producers.
The power challenge forced government to resort to thermal which has proved expensive. At the recent commissioning of Nyabarongo I, officials estimated that the plant alone which is contributing 18 per cent to the national grid would save the country some $30 million spent on importation of fuel to run diesel power generators.
The government targets electricity access rate of 70 per cent so as to achieve an overall target of 563MW in 2017. This calls for a robust and creative resolve in the search for energy given that the country does not have plenty of water bodies to generate hydro power.
A five-year electricity strategic plan in place projects to deliver about 232MW of hydropower, 310MW geothermal power and 300MW from methane gas, as well as strengthen and expand transmission lines by an additional 2,100km. Peat and solar are also being explored as sources of energy. Because most of the energy projects are at initial stages and the demand for power is rising, the government has recently struck power import deals with some countries in the region like Uganda, Kenya and Ethiopia.