PPIAF Assistance in Rwanda

October 2012
PPIAF Assistance in Rwanda
Since 2001 PPIAF has been providing technical assistance to the Government of Rwanda to develop the
country’s infrastructure policy framework with the objective of facilitating private investment in
infrastructure. PPIAF has also provided project-specific support for several methane gas power plants in
Lake Kivu and for a new bus terminal in Kigali city.
Technical Assistance for Rwanda’s Enabling Environment
PPIAF’s technical assistance to the Government of Rwanda began in 2001 with a Country Framework
Report (CFR), completed in July 2003. The CFR consists of a comprehensive study of the country’s
infrastructure in the transport, energy, water and sanitation, and telecommunications sectors and provides
a route map for infrastructure sector reform, highlighting the opportunities that exist for the private sector,
the role that the donor community can play in assisting the Government of Rwanda to realize its priorities
in infrastructure, and the supporting policies and actions required for implementation of the
recommendations.
Most of the country’s infrastructure was destroyed during the 1994 civil war. With the support of the donor
community, some infrastructure had been rehabilitated by 2001, but nevertheless much remained to be
repaired. In addition, sufficient levels of maintenance had not been sustained, resulting in a decline in the
quality of the country’s infrastructure.
Among the recommendations of the CFR that led to follow-up PPIAF technical assistance grants to
Rwanda are: exploit the potential of Lake Kivu gas to meet electricity generation needs by preparing
project structures and contracts consistent with the long-term energy policy framework; and encourage
and support local commercial banks to provide medium- and long-term loans for company start-ups as
well as the provision of micro-financing facilities (see below).
A follow-up grant in 2004 assisted the Government of Rwanda to organize a tripartite (i.e., government,
donor community, and private sector) high-level conference that took place in Kigali on December 8, 2004
to discuss the findings and recommendations of the CFR for the energy and water sectors, as well as
identify investment opportunities for the private sector. The conference also aimed to increase private
investors’ and donors’ interest in infrastructure investments in Rwanda, as well as build consensus on the
way forward both within and outside of the country. The government agreed to pursue the strategy
outlined in the CFR, and the development agencies in attendance made pledges to support the
Government of Rwanda in its infrastructure reforms.
Results of PPIAF’s Activities for Rwanda’s Enabling Environment
Category
Enabling environment reform
Outputs
Analyses/assessments prepared
Capacity and awareness building
Workshops/seminars
A Country Framework Report—Private Solutions for
Infrastructure: Opportunities for Rwanda, 2003
Energy and water conference held in Kigali to present the
findings of the CFR, December 8, 2004
Category
Outcomes
Capacity and awareness building
Consensus achieved
The Government of Rwanda agreed to pursue the strategy
outlined in the CFR, December 8, 2004
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Technical Assistance for Rwanda’s Power Sector
The CFR was followed by a more specific request in 2005–2006 from the Ministry of Infrastructure for
transaction support for the development of several private methane-fired power projects on Lake Kivu, in
the West of Rwanda, including the first stage of Kibuye Power Gas development and power generation
project. Lake Kivu is unique in that its deep waters contain an enormous quantity of dissolved methane
gas, formed in the lake from a combination of geological and biological processes.
PPIAF approved three grants over the 2005–2006 period to provide legal and financial advice to the
Government of Rwanda for the development of several power plants. After the support was provided for
the Kibuye project, the Government of Rwanda decided to look for a new sponsor for the project and thus
the Kibuye project could not proceed as initially intended. At present, several other private developers,
including US Contour Global, are developing new projects to be fuelled with the methane to be obtained
from Lake Kivu. We expect that in the development of the projects and the negotiations with the
Government of Rwanda, the expertise developed through PPIAF’s support will be used.
In Rwanda's Energy Sector Strategic Plan 2011–2017, the Government has committed to ensuring the
availability of sufficient, reliable, and affordable energy supplies for all Rwandans; promoting the rational
and efficient use of energy; and establishing environmentally sound and sustainable systems of energy
production, procurement, transportation, distribution, and end-use. In 2011 the Government of Rwanda
requested PPIAF support to facilitate the promotion of new energy generation and transmission projects,
including increased private sector participation in order to achieve long-term development goals, which
include increased electricity access. PPIAF supported a rapid diagnostic of the electricity sector in
Rwanda and a review of “Electricity Development Strategy: 2011–2017”, identified projects to be
developed on a priority basis to meet the electricity demand, and the actions and measures required to
develop priority projects.
The prioritized PPP projects include: i) Peat to power project (the 15 MW power plant at the cement plant,
and perhaps the 100 MW plant being planned by Punj Lloyd); ii) Nyaborongo II multipurpose dam and 17
MW hydropower project; iii) Multiple micro hydropower projects, which could generate 30-50 MW; iv)
Ruzizi III and Rusomo regional hydropower projects; v) Geothermal power projects (10 MW well head
project, and subsequent 75 MW plant); vi) KivuWatt Methane to Power Project (25 MW Phase I; 75 MW
Phase II); and vii) Israel Africa Methane to Power Project (50 MW).
The investment opportunities were presented at an Energy Investor Forum held in Kigali in October 2011.
PPIAF plans to follow up with support to the actions and measures required to develop priority projects
identified under this grant.
Results of PPIAF’s Activities in Rwanda’s Power Sector
Category
Enabling environment reform
Outputs
Analyses/assessments prepared
Rwanda Electricity Sector: Independent Diagnostic Report—
Phase I, October 2011
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Project cycle-related assistance
Transaction support
Financial advisor to assist with the finalization of the financial
aspects of the project for the government in its several roles as
concessionaire, equity shareholder in the private
implementation company, and the off taker of the power, 2006–
2007
Legal advisors for the government to ensure that the
transaction is bankable and conforms to acceptable market
practices for project financings; the legal advisors advised the
government on finalizing key project documentation for the first
stage of Kibuye Power Stage 1 Gas development and power
generation project, 2006–2007
Technical Assistance for Rwanda’s Transport Sector
In 2010 the Government of Rwanda requested PPIAF, through its Sub-National Technical Assistance
(SNTA) program, to support a debt pre-feasibility study to assess the potential of the Kigali municipality to
attract market-based domestic finance for the rehabilitation of the existing or eventual construction of a
new bus terminal in Kigali, and prepare the corresponding action plan.
The City of Kigali is not only the country’s capital but also the country’s most important business center
and main port of entry. In the past years the city has transformed from a small country capital to a modern
metropolitan area with about 1 million inhabitants. As a consequence of this increased economic activity
and limited space for expansion and in view of the hilly topography, the city has been facing increased
traffic problems. A key gateway to Kigali City is the Nyabugogo station that acts as an upcountry bus and
taxi station from other regions. It was constructed 15 years ago to channel transport vehicles coming from
the North, West, and South. Constructed on a 2.36 ha area plot, it was supposed to host 60 buses and
mini-buses. However, the Nyabugogo station presents a number of problems: one third of the area is
currently occupied by commercial activities not related to the normal activities of a bus station and
services to passengers; the space allotted to parking is too small to handle the considerable increase in
traffic and its pavement has disappeared; and the bus platform is covered with potholes and
characterized by poor drainage.
The city prepared a rehabilitation plan and subsequently requested PPIAF support to provide the city with
the necessary elements to compare financing options and make informed choices.
The PPIAF-funded study analyzed in detail current bus terminal operations, the applicable legal and
regulatory regime, and the capital costs required for the rehabilitation of the bus terminal to develop
financial projections and financing options. Among the alternatives for financing, the study analyzed the
pros and cons of sub-national financing, a bond issued in the local capital markets, financing from
commercial banks, and a public-private partnership arrangement: a Design-Build-Finance-Operate
(DBFO) scheme pursuant to which a private operator would source the required financing for the planned
rehabilitation works or capital expenditures and would manage the bus terminal. This study has been
discussed with the Kigali municipality, and a decision is pending.
Results of PPIAF’s Activities in Rwanda’s Transport Sector
Category
Enabling environment reform
Outputs
Analyses/assessments prepared Kigali bus terminal debt feasibility study, 2010
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Plans/strategies prepared
Options for the financing of the bus terminal, either with subnational
financing, a bond, commercial financing, or through
public-private partnerships
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