Development Bank of Rwanda (BRD) has signed a long-term loan agreement worth Rwf8 billion with Rwanda Mountain Tea (RMT) for the construction of a four Megawatts (4 MW) Hydro power plant in Nyabihu District, Western Province.

The move aims at boosting government’s efforts to generate 563Megawatts of electricity by 2017. The loan facility will go toward the construction of the second phase of the Giciye II hydro power project worth Rwf11.4 billion which will add 8MW to the national grid when combined with the already operational Giciye1 power project.

The signing ceremony took place at the project’s site in Nyabihu over the weekend.

Alex Kanyankole, the Chief Executive Officer BRD, noted that the energy sector requires joint efforts from the public and the private sector to be able to realise the country’s dream of generating enough power to fast-track economic development.

"We are proud to partner with an important investor such as Rwanda Mountain Tea. This is the second phase of the Giciye II hydro power to be constructed jointly after the successful completion of Giciye I which is now connected to the national grid,” Kanyankole told The New Times shortly after the signing ceremony.

We will continue financing priority sectors of the economy because this is the only way the country will achieve economic sustainability, Kanyankole added.

According to BRD boss, the grant will be paid over a period of seven years with affordable interest rate and a one-year grace period.

The Managing Director Rwanda Mountain Tea, Jotham Majyalibu, said the initiative is a big boost toward reducing the cost of production.

"It’s also a huge boost toward rural electrification,” Majyalibu said.

He said the project will take about 18 months to be completed and will contribute significantly to the socio-economic development of Rwanda.

The Rwandan government aims to increase power generation capacity to ensure that citizens access reliable and affordable energy to help boost economic development enshrined in the second Economic Development and Poverty Reduction Strategy (EDPRS II) objectives.

The target is to increase access to electricity from the current 22 per cent to more than 60 per cent of the population and have the country’s generation capacity increase from the current 155MW to 563MW by 2017.

Rwanda, recently reached an agreement with the Ethiopian government to import 400MW of power. The country is also expected to import 30MW from Kenya next year.

Germaine Kamayirese, the State Minister in charge of Energy and Water at the Ministry of Infrastructure, said the national power generation capacity is expected to increase by 61.5MW by 2015 through projects such as Nyabarongo I (28MW), Kivuwatt 25MW, Gishoma Peat Plant (15MW) and Giggawatt Solar power plant 8.5MW.

Other projects envisaged to commence soon include 100MW of peat power, 100MW of hydro power from Nyabarongo II, 50MW from methane gas and geothermal exploration to commence soon on Rubavu geothermal project.

For Rwanda Mountain Tea, the huge challenge of high power costs from the numerous Tea manufacturing plants will be resolved through such initiatives.

In 2012, the company received Rwf1.5 billion financing for the construction of the 4 Mega Watts (Giciye I) in Nyabihu District which has boosted the Government efforts to meet the high shortage and irregularity of electricity supply in Rwanda.

The project has significantly contributed to the emergence of huge investments in the social infrastructure in Nyabihu as surrounding communities benefit from consistent supply of electricity from Giciye I.

GICIYE II is a hydropower plant project also promoted by Rwanda Mountain Tea limited, aiming at developing the energy sector with a major focus on benefiting the local population and enterprises through supplying power to the nearby national grid at an affordable price.

Rwanda Mountain Tea is an important investor in Rwanda tea industry with a strategic mission to invest in the energy sector to facilitate the Government of Rwanda in meeting the enormous energy deficit.

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 4MW plant construction Loan agreement signing in Pictures: