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

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Table 7.3: Summary of Key Programme Risks, Mitigation Measures and SensitivitiesRiskMitigationSensitivity testChange in level of political supportThe access programme currently has broad-based political support. The electricitysector has recently received an increasing level of government support and thetargets for electricity access are stipulated in the Governments EDPRS.Government contributions have been estimated accounting for fiscal limitationsand the need to fund other Government expenditures.Considers the effect of no Government contribution to the access programme,with contributions from customer payments and development partners remainingthe same.Impact on funding requirements Impact on new connections+US$40 million-33,000 connectionsRiskMitigationSensitivity testInadequate supporting legal and regulatory frameworkThe access programme does not rely on fundamental changes to the existinglegislative or regulatory framework. Regulatory capacity is currently being enhancedunder a grant from the Investment Climate Facility for Africa (ICF), which will helpto ensure credible and consistent regulatory decisions on electricity tariffs andservice standards.Considers the impact of a 20 percent reduction in tariffs, lowering tariff levels to90 RWF/kWh. As discussed in Section 5.2, a recent report on tariffs and subsidiesin Rwanda recommends caution in this area (Vernstrom, 2008). This action wouldreduce available funding from customer payments by US$25 million, which wouldneed to be raised from other sources. In addition, the programme could no longerbe considered financially viable because operating cash flows would not coveroperating expenses. This might in turn reduce the level of support for theprogramme.Impact on funding requirements Impact on new connections+US$25 million-21,000 connectionsRiskMitigationSensitivity testInsufficient demand for new connectionsDemand for new connections has been analysed on the basis of recent expendituresurvey evidence and Government proposals to lower connection charge to anominal level of US$100. A proposed tariff study will also complete a detailedanalysis of the willingness to pay for electricity. The programme implementationunit will collect data on connection acceptance rates as the access programmemoves into the implementation phase and plans will be updated as further evidenceon affordability and willingness to pay becomes available.Considers the impact of continuing to make new connections at the current rate of25,000 new connections each year to 2012, while keeping other sector investmentsthe same. Lowering the rate of new connections will reduce the total cost of theprogramme, but also directly comprises the primary objective of the programme toextend electricity access. Under this scenario, the average cost per connectionwould rise to over US$2,000.66
Impact on funding requirements-US$11.6 millionImpact on new connections-128,000 connectionsRiskMitigationSensitivity testRiskMitigationSensitivity testInsufficient supply from new generation sourcesThe access programme relies on sufficient supply of electricity from new hydro andmethane gas sources. Construction has already begun at two new hydro plants witha combined installed capacity of over 35MW. A pilot plant is also operating at LakeKivu and a deal has been finalised to deliver 100MW of new methane gasgeneration capacity. The ICF is also providing technical support to thesedevelopments.Considers the impact of a delay in commissioning the 25MW methane gas plant atLake Kivu until 2013. This scenario would increase generation costs because theHFO plant would need to operate more. A delay in methane gas generation wouldalso reduce operating cash flows as no energy would be available for export.Impact on funding requirements Impact on new connections+US$15.4 million12,800 connectionsInability to mobilise funding from customer payments due to non-paymentCollection rates from customers are relatively high in Rwanda due to prepaymentmetering, and theft of electricity is relatively low. Programme evaluation in thisProspectus accounts for historic rates of delinquency and default. The Governmentwill monitor the payment of invoices by public sector institutions.Considers the impact of reducing customer collections by 10 percentage pointseach year. Residential collections are assumed to fall from 75 percent in 2007 to 65percent in 2009. Larger customer collection rates are assumed to fall from 80percent in 2007 to 70 percent in 2009.Impact on funding requirements Impact on new connections+US$24.0 million-20,000 connectionsRiskMitigationSensitivity testFailure to achieve capital cost reductionsThe access programme relies on achieving significant reductions in the capital costof certain components based on the larger scale of the programme and changes totechnical specifications. The modelled cost reductions are conservative, and theinstalled costs of programme components is projected to remain higher thancomparable projects in the region, due to the smaller demand in Rwanda andadditional transportation costs.Considers the impact of MV line costs that are the same as the STEG pilot project(US$65,000/km).Impact on funding requirements Impact on new connections+ US$38.7 million -33,00067
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Rwanda ElectricitySector AccessProg
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Table of Contents1 Purpose of Prosp
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Figure 2.2: Comparative Data from A
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Glossary of TermsAbbreviations and
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Executive SummaryThe Government of
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A series of important conclusions o
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There are three sources of funds fo
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1 Purpose of ProspectusThe Governme
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2 Access Programme is a Critical Pa
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supply capacity is available as exp
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Table 2.2: EDPRS Targets for Expand
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important for the access programme,
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Central GovernmentThe Government’
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3.4 Energy Sector Legislation and R
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: To account for funds committed to t
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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