New $350m peat power project to increase generation capacity by 40%

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Rwanda, which mainly relies on hydro-power, is encouraging investment in other energy sources. (File)

Rwanda’s efforts to increase power access to 70 per cent of all households in 2018 have been boosted by the signing of a $350 million (about Rwf291.6 billion) financing deal between lenders and YUMN Limited to develop an 80MW peat-fired power plant.

The project in Mamba Sector, Gisagara District will be funded by the Africa Finance Corporation, Finnfund, PTA Bank, Afrexim Bank, Development Bank of Rwanda, and Exim Bank of India.

The plant is expected to increase national electricity generation capacity by 40 per cent and reduce expensive power imports, according to the Ministry of Infrastructure.

The project will significantly enhance the country’s energy production since it is meant to use 100 per cent of domestic fuel, the ministry added.

Speaking at the deal signing ceremony in Kigali on Tuesday, the Minister for Infrastructure, James Musoni, said the project comes as “another commendable step toward achieving Rwanda’s economic goals and raising the country’s economic and social status as par its development strategies.

“This project will increase our installed capacity by 80MW, and might be the biggest power plant in the country by the time it comes on line in 2019. Together with other energy projects in the pipeline, it is expected that our installed capacity will significantly increase to over 500MW in the next five years,” Musoni said. The signing event was also witnessed by YUMN’s equity sponsors, Hakan Madencilik A.S, a Turkish coal trading company; Quantum Power, a power and energy infrastructure investment platform; and Themis.

Hakan Karasoy, the vice-chairman of Hakan Madencilik, lauded the government for its unwavering support toward the project, saying: “We are excited to be bringing much-needed electric power to the people of this country.” Matty Vengerik, the chief executive officer of Quantum Power, was hopeful the plant will have a significant impact on the country’s economy. “We are delighted to have reached this milestone in the development of the project and to participate in the transformation of the Rwandan energy sector,” Vengerik said.

YUMN, which was incorporated in Rwanda four years ago, will build the 80MW peat-fired power plant on a build, operate, own and transfer (BOOT) basis and has a 26-year power purchase agreement with the government, the ministry officials said.

The project involves construction and operations of both peat harvesting and power generation facilities and works will take 36 months.

The second phase of project has an additional 40MW of capacity. After the construction, YUMN will operate the plant for 26 years and then transfer it to the government.

Access to power is at about 25 per cent in Rwanda, according to the International Energy Agency’s World Energy Outlook for this year, and the government is seeking to increase this to 70 per cent by 2018, and 100 per cent by 2020. The country’s power generation capacity currently stands at over 161 per cent, with hydro-power accounting for 97.37MW of Rwanda’s total installed capacity, thermal is at 51.7MW, methane accounts for 3.6MW, while 8.75MW is produced from solar energy.