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

Government should be cautious about promising any tariff cuts as a result of thedevelopment of lower-cost generation sources. The Government intends to ensure that, atthe very least, customer payments cover the entire system operating costs.However, for the success of the access programme it will be important to make the initialconnection cost affordable to customers. New customers are currently charged close to thefull cost of connection, which can exceed US$500 and is not affordable to the vast majorityof Rwandan households. The financial projections in this Prospectus have been calculatedassuming that grid-based electricity consumers are asked to contribute 10 percent of the costof their connection—an average of US$100 per connection.Assuming that tariffs remain at current levels and a US$100 connection charge applies, thesector is projected to generate around US$75 million (42 billion RWF) in surplus cash flows(that is, after meeting operating costs). These surplus customer payments will be used tofund a small proportion of investments in new generation, transmission and the accessprogramme—offsetting funding requirements from the Government and developmentpartners. Figure 5.4 (below) presents projections of surplus cash flows to 2013, and adetailed breakdown of cash flows from operations is provided in the Technical Annex,Section 4.2.Figure 5.4: Projected Electricity Sector Net Operating Cash Flows (2009–2013)252222Sector Operating Cash Surplus (US$ million)20151055718-2009 2010 2011 2012 2013Projected surplus cash flows are projected to increase significantly when the planned 25MWmethane generation plant is commissioned in 2011. This will reduce operating costs bydisplacing higher-cost generation from heavy-fuel oil.Summary of funding needs and funding sourcesAn initial analysis has been prepared of how total sector funding needs over the next fouryears (2009–2013) will be met while adhering to the following two funding principles:• At a minimum, sector operating costs will be met through operating revenues54