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

5 Funding for the Access ProgrammeThis Section presents the funding plan for the access programme. The funding plan showsthat the access programme is not only technically viable, but also financially feasible,sustainable and stable. The funding requirements for the access programme and the sector asa whole have been projected on a cash-flow basis, and commitments for procurementpackages have also been considered. This ensures that funding will be available as needed tosupport programme investments, eliminating interruptions that would frustrate progress andundermine the ability for sector players to achieve programme objectives.This section demonstrates that the access programme can be fully-funded, provided asufficient level of external support is contributed by development partners. The programmefits well with existing funding allocated to new grid connections, micro-hydro developmentsand solar PV installations. The access programme is also founded on a principle of improvedsector financial sustainability—that at a minimum the sector must be able to cover operatingcosts from customer payments and make a 10 percent contribution towards the capital costsof the access programme.This section first identifies the financial resources required to meet sector costs and achievethe objective of improved financial sustainability. Section 5.1 presents cost estimates for theaccess programme, divided into the core components of network extensions, networkstrengthening, new household connections, and off-grid connections. In Section 5.2 the costof the access programme is considered alongside other funding needs (operating costs andcapital investments in new generation and high-voltage transmission) to provide a completepicture of sector financial flows. Section 5.3 considers how financial commitments will needto align with the procurement of materials for the programme. Section 5.4 then discusseshow an appropriate level of Government support for the access programme will balance theGovernment’s support for the access programme against other Government priorities andfiscal constraints.The financial analysis presented in this Prospectus is based on detailed financial modelling ofsector cash inflows and outflows. Although the accuracy of these forecasts cannot beguaranteed, effort has been made to ensure that the cost estimates and expected revenues arebased on realistic assumptions. A detailed breakdown of the assumptions of the cash flowmodel and the financial projections contained in the model can be found in Section 4 of theTechnical Annex.5.1 Estimated Cost of Access ProgrammeThe cost of the physical plans for extending access to electricity presented in Section 4 havebeen estimated to calculate the total funding required for the access programme. The cost ofeach component in the programme has been estimated, together with the level of fundingrequired for technical assistance. Table 5.1 (below) provides a summary of the totalestimated capital costs of the access programme. The largest cost components of theprogramme are the extensions to the MV network, new connections through infills and inexpanded distribution areas, development of micro hydro generators, and solar PV units forhealth centres, schools and administrative offices.41