Volume I: Investment Prospectus Rwanda Electricity Sector Access ...

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Development PartnersA number of development partners from the international donor community providetechnical and financial support in the Rwandan electricity sector. Active developmentpartners in the sector include the African Development Bank (AfDB), EuropeanCommission, United Nations Industrial Development Organization (UNIDO), the WorldBank, International Finance Corporation (IFC) and the Governments of Belgium and theNetherlands (through GTZ of Germany). Development partners support investments inrenewable generation (such as micro-hydro plants and solar projects), regional energyprojects and methane gas-power generation at Lake Kivu. The World Bank and NordicDevelopment Fund have also funded investments under the Urgent ElectricityRehabilitation Project (UERP) to help Rwanda increase its electricity generation capacity andimprove reliability following supply shortages in 2004.Local GovernmentThe Government of Rwanda has embarked on a successful decentralisation policy. TheGovernment views a policy of decentralised administration as an instrument for politicalempowerment, a platform for sustainable democratic development, as a way to mobiliseresources, and as a means for social reconciliation. The country has two layers ofgovernment: Central and Local. Local administrative entities include provinces (Intara),districts (Akarere), sectors (Umurenge), cells (Akagari) and the village (Umudugudu).Local government roles in the electricity sector include implementation, service delivery,participation and accountability. The decentralisation policy in Rwanda creates opportunitiesto seek local solutions to service delivery problems by coordinating with local communities.This is particularly important for development partners that support service deliveryactivities, particularly in small electricity systems based on peat and mini-hydro resources.As the access programme moves into the implementation phase, local governments will actas important intermediaries between national authorities and local community organisationsthat are interested in mobilising resources to supply their region.3.3 Energy Sector Strategy and PolicyThe Government’s strategic vision for developing the energy sector is articulated in a newnational energy policy and strategy. 10• The national energy policy contains policy statements on issues such as energypricing and subsidies, energy sector governance and regulation, and the financingof energy sector investments. The policy also contains a separate policy statementon the electricity sub-sector, which confirms the policy commitment to enhancingaccess to electricity, particularly in rural areas• The national energy strategy sets out how the energy transition in Rwanda willbe achieved given the macroeconomic impacts of consuming more petroleumproducts and electricity. The strategy highlights that the Government’s prioritiesto develop a knowledge-based economy and exploit indigenous energy resourceswill help to ensure that modern energy consumption is consistent with sustainableincreases in national income levels.10 Rwanda National Energy Policy and National Energy Strategy, November 2008.12
3.4 Energy Sector Legislation and RegulationThe Government has recently enacted a suite of new legislation in the energy sector. TheElectricity Law governs the supply and distribution of electricity, and the Gas Lawadministers the use of methane gas from Lake Kivu. New laws have also been drafted tocreate the new electricity utility RECO and establish a National Energy DevelopmentAgency (NEDA). These laws complement an existing regulatory framework for Rwandanutilities, and give additional powers and responsibilities to the independent regulator, RURA.The Electricity Law reflects a commitment to moving away from Government managedelectricity supply to a system that emphasizes an efficient utility managing transmission anddistribution, while allowing increasing private sector investment in generation. TheElectricity Law provides that the electricity transmission entity (currently Electrogaz) willhave an exclusive right to transmit electricity, and will also be responsible for operating thesystem.Although the current supply chain in Rwanda relies on a single-buyer, Electrogaz, purchasingpower from private plants, the Electricity Law also preserves opportunities for further sectorreform when the time is right.The regulator is responsible for issuing licenses to electricity generators, transmission anddistribution entities, and has powers to set tariffs based on the economic costs of servingeach class of customer. The regulator may reallocate costs among customers, provided thatthe tariff-setting methodology is designed to enhance the efficiency of the sector. TheElectricity Law requires also RURA to consult MININFRA to understand the level ofproposed government subsidies before setting tariffs. The regulatory framework encouragetariffs that allow investors to recover a rate of return on that is comparable to the returnobtained in similar investments.RURA plans to build capacity to assume the additional regulatory responsibilities it has beengranted under the Electricity Law. RURA is receiving technical assistance and training underthe ICF-funded “Capacity Building and Transmission Support in the Rwandan EnergySector Project”. Specific areas of capacity building are licensing and concessions, tariffregulation, network access and regional interconnections, advice on power purchaseagreements, and regulatory strategy.13
Page 1: Rwanda ElectricitySector AccessProg
Page 5 and 6: Table of Contents1 Purpose of Prosp
Page 7 and 8: Figure 2.2: Comparative Data from A
Page 9 and 10: Glossary of TermsAbbreviations and
Page 11 and 12: Executive SummaryThe Government of
Page 13 and 14: A series of important conclusions o
Page 15 and 16: There are three sources of funds fo
Page 17 and 18: 1 Purpose of ProspectusThe Governme
Page 19 and 20: 2 Access Programme is a Critical Pa
Page 21 and 22: supply capacity is available as exp
Page 23 and 24: Table 2.2: EDPRS Targets for Expand
Page 25 and 26: important for the access programme,
Page 27: Central GovernmentThe Government’
Page 31 and 32: Figure 4.1: Overview of Approach to
Page 33 and 34: Table 4.1: Variables Considered in
Page 35 and 36: Figure 4.3: Location of Administrat
Page 37 and 38: In order to provide a realistic vie
Page 39 and 40: The planning approach compares the
Page 41 and 42: • Presidential priorities for ele
Page 43 and 44: Figure 4.8: Least Cost Grid Priorit
Page 45 and 46: Figure 4.12: Least Cost Grid Priori
Page 47 and 48: Figure 4.14: Least Cost Grid Priori
Page 49 and 50: Off-grid micro hydro systemsThe com
Page 51 and 52: Table 4.4: Social Institutions Elec
Page 53 and 54: Figure 4.17 (below) indicates the l
Page 55 and 56: Figure 4.19: Overall Electrificatio
Page 57 and 58: 5 Funding for the Access ProgrammeT
Page 59 and 60: The average contract size is expect
Page 61 and 62: Estimates of the capital cost of th
Page 63 and 64: ased on how much is needed to meet
Page 65 and 66: which estimate 370GWh of domestic e
Page 67 and 68: Table 5.5: Capital Cost of Sector I
Page 69 and 70: on approximately 75 percent of resi
Page 71 and 72: • The capital costs of the access
Page 73 and 74: • EPC contracts for half of the n
Page 75 and 76: Managing Director of RECO will then
Page 77 and 78: Figure 6.2: Overview of Programme M
Page 79 and 80:
The electricity utility is well-pla
Page 81 and 82:
To account for funds committed to t
Page 83 and 84:
Impact on funding requirements-US$1
Page 85 and 86:
7.3 Management of Development Partn
Page 87 and 88:
ReferencesColumbia Earth Institute.
Page 89:
T: +1 (202) 466-6790F: +1 (202) 466
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Volume I: Investment Prospectus Rwanda Electricity Sector Access ...

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