Rwanda Energy Group (REG) is set to revise, downwards, power tariffs for productive users, such as industries in the coming months.
The revision of tariffs was initially to be implemented by May this year but it was postponed.
The Minister for Trade and Industry Vincent Munyeshaka, said that the revision will largely benefit productive users. He said that the country is in the process of getting past the hurdle of energy production, which has made room for price reduction.
“Previously, energy production was not enough. We have been able to boost production. Now we are trying to make it cheaper for users, especially the productive users in the industrial sector. This is part of the reforms that are ongoing,” Munyeshaka said on Friday.
He said that they have since conducted a feasibility study which proved that price adjustments were now possible.
“We want to have some preferential consideration for productive users. We conducted a feasibility study whereby the findings show that it is possible to reduce the cost further,” he said.
REG chief executive Ron Weiss said that the revision will also involve reduction of cost of generation by cutting reliance on fuel for energy generation.
He said that the firm is working to ensure that by 2020, there will be no reliance on fuel for energy generation which will reduce cost of production. This will include installation of new power stations.
The increasing demand for energy by large industries also makes it possible for the firm to reduce on cost.
Among the challenges that have been in the way of revision of tariffs include energy losses due to quality of grid, as well as theft.
“We are currently facing a challenge of theft, which is causing us to lose significant revenue,” he said.
The firm estimates that the current losses are about 20 per cent of all energy on the grid with about half the losses being commercial losses due to theft.
“We have succeeded in reducing the technical losses to below 20 per cent by improving the grid. The target should be less than 10 per cent. Every year we plan on reducing it by at least one per cent,” he explained.
He, however, noted that the tariff reduction will not be drastic on the onset due to cost of production.
“We are still not mature enough to reduce the tariffs drastically. Every new power station will enable us reduce the cost gradually. It will take some time,” he said.
The revision, he said, was delayed as they were experiencing challenges such as drought which saw water quantities in the dams reduce.
“We had a challenge in the previous year as the quantity of water was quite low due to the drought that was experienced,” Weiss explained.
Ongoing consultations with the Rwanda Development Board and the Ministry of Trade and Industry will determine which sectors will be considered to benefit most from the price adjustments.
Current electricity tariffs have consumers with large industries pay Rwf83 per kilowatt, those with medium industries Rwf90 per kilowatt, while the small industries pay Rwf126 per kilowatt.
Regional average cost of energy at the grid is $15 cents.
A recent study by local private sector across the East African region showed that cost of energy contributes between 15 per cent and 18 per cent of total production costs.