Investors cry for enough, cheaper and reliable energy
In the East Africa Community (EAC) framework, all member states are fighting tooth and nail to win a considerable market share.
Yes, right now the ground is not levelled but whoever has the right strategies and policies in place will enjoy sustainable competitiveness in future.
Rwanda, coming from a very dark past comparable to no single country in the world, today inspires many nations and some have visited it to learn a lesson or two.
Fourteen years back, after the Genocide against the Tutsi, Rwanda designed good socioeconomic strategies and policies just like many nations do, but went ahead and did two things which are not common to many African governments; dedication and effective implementation of the strategies and policies, and putting resources to proper use.
This, precisely, explains why the country has registered impressive socioeconomic reforms. The consistent increase in Foreign Direct Investment (FDIs) reported by Rwanda Investment and Export Promotion Agency (Riepa) yearly are indicative of a nation now trusted and inspiring many in the world.
However, there’s one major missing link that investors; large, medium or small, think the government will have to double her efforts. There’s need to find sustainable energy solutions to tame the already high cost of doing business in Rwanda.
At 22 US cents per kilowatt hour, the power tariff in Rwanda is the highest among the EAC member states. For instance, in Uganda the power tariff is about 16 US cents per kilowatt hour, in Kenya and Tanzania it is about 13 US cents per kilowatt hour.
A few of the big investors interviewed by The New Times say energy costs take a considerably big share of their budgets. For instance, MTN Rwanda’s Chief Finance Officer, Anthony Mosozera says $5 million is spent annually only on fuel to run generators at their repeater stations across the country.
Bralirwa also spends about the same amount, according to the former company MD Door Plantenga. State Minister for Natural Resources Vincent Karega says investors in the mining sector need enough and reliable power. He keeps promising them that sustainable energy solutions are underway.
Emanuel Hategeka, the Secretary General of Private Sector Federation says if the Small and Medium Enterprises (SMEs)—over 85 percent of the entire business sector is to become more competitive, they need cheaper and reliable power supply to do value addition. Rwanda sector has a number of investors willing to invest in tea processing but need cheap and reliable power.
Alex Kanyankole, the Managing Director of Rwanda Coffee Development Authority also says investors in coffee washing stations need cheaper and reliable power. Precisely, all sectors need enough, cheaper and reliable power supply. As the country grows, power demand also increases.
Today, Electrogaz Managing Director John Milenge says power distribution in the country is about 7 percent but emphasises that supply and distribution will increase in the near future considering the ongoing distribution plans in the country.
Whereas it used to take months to get connected, Milenge says Electrogaz has subcontracted three companies to connect people and now it takes only days.
The companies are also supplementing Electrogaz in extending power to rural areas. The interesting news is that in order to give power the focus it deserves, the cabinet recently passed the law separating the two utilities; water and power.
The Rwanda Electricity Corporation (RWECO) and Rwanda Water and Sewage Corporation (RWASCO) will be established.
That aside, increase in power supply is the only thing that can convince investors of reliable and cheaper power supply in the country.
And, much as a number of hydro, thermal, biogas, solar and wind supply plans are in the pipeline, the biggest promise is the methane gas.
Progress made so far…
According to Engineer Albert Butare, State Minister for Energy, “Extracting methane gas is a unique venture. We had to prove whether the technology works first. This involved conversion of gas to electricity.
We had to make sure that if the gas is extracted the lake remains stable. Am sure you have heard about what happened with Lake Neon in Cameroon where carbondioxide reached a concentration and fumed out and killed a lot of people.
With such experience people were worried and we had to assure them first. But also international finance partners like International Finance Corporation (IFC) were not sure.”
Butare says it’s a strong milestone that the technology has been tested and now works well.
Rwanda started extracting the gas on May 15th, last year. But the gas did not meet the specifications. Since that date the gas has been going through the simulation to be able to get the gas with the parameters that engineers at the plant were looking for.
For instance, the machines require 70 percent methane gas content and flow rate of between 450 and 700 kg/hour, and as low as 0.2 percent of hydrogen sulphite.
Being the first technology of its kind, it took engineers time to ensure that all these parameters are met. Beginning of October 2008, that is when getting the required started. On the 6th of November 2008 was when the first electricity was sent into the grid.
To be continued...
The writer is a communications specialist at Rwanda Private Sector Federation