Finally the government has signed a contract with an Indian firm paving way for the construction of a hydropower dam on River Nyabarongo.
Bharat Heavy Electrical Limited (BHEL), an Indian government company and Angelique International Limited will jointly carryout the construction.
According to the agreement, the power project is to be completed by mid 2011. If completed, It is expected that another 27.5 Mega Watts of power will be added to the national grid.
Eng. Albert Butare, the State Minister for Energy said government is executing the project to increase power generation. The move is to satisfy the electricity demand in the country, the sub region and reduce power tariffs.
“This is a 100 per cent government project therefore power will be more affordable to the users. Electricity tariff will reduce as diesel generators will be replaced,” the minister said.
The signing of the agreement comes after the Rwandan government obtained a dollar credit line worth $80 million from Export-Import Bank of India (EXIM Bank of India) to finance this project.
So far, $20 million has been disbursed as the first installment. According to Butare, the main loan, will be reimbursed at an interest rate of 1.75 per cent over a period of 15 years, after a grace period of 5 years.
Last Thursday the government signed the final agreement with the executers. “It has taken us about 7 months of concluding negotiations with EXIM. Apparently we only need to sign the legal documents and works will begin towards the last quarter of this year,” he added.
The power project comes at a time the country has the lowest per capita electricity consumption around the world.
By 2004, only about 65,000 households had access to grid supplied power and these are mainly in the urban areas.
With construction of the first government owned dam, it is hoped that many more people will have access to electricity by 2011.
This project will therefore contribute to improving the reliability and quality of grid electrical services for sustaining the growth momentum.
Some rural people in Rwanda mainly depend on diesel as primary fuel for self generation while kerosene lights the vast majority.
Diesel has also been widely used as a major back up in urban areas especially during crisis. Eng Butare said when the power plant is completed, government will decrease expenditure on diesel.
The fuel is also used to run most of the machinery in most companies. Experts say power tariffs will go down at approximately US 8 cents per Kilo Watt compared to the estimated cost for energy from diesel thermal plants which is at more than US24 cents per Kilo Watt.
Asked about the energy resources that the population will be using before the new project commences operation, minister Butare said that there is a solar panel at Jali that produces about 250 Kilo Watts while methane gas power project is also underway.
“We are also working on a heavy fuel oil plant that will deliver 20 Mega Watts,” the minister said. The diesel engines and generators at the plant belong to the government.
Butare also stressed that the government will incur all expenses on maintenance of the power project. This is in the bid to prevent Electrogaz from charging an extra tariff on the final user.