The 28MW Nyabarongo hydropower plant in Muhanga district, southern Rwanda. PHOTO | CYRIL NDEGEYA
What you need to know:
In the past two months, Rwanda, Tanzania and Kenya have announced a number of energy ventures aimed at meeting rising demand and attracting more private sector investments.
East African governments have doubled their efforts to increase energy output, with several multi-million dollar projects on the cards.
The aim is to meet rising demand as well as attract more investments, after the 2014 World Bank Ease of Doing Business report noted that low energy output remains a hurdle for investors.
In the past two months, Rwanda, Tanzania and Kenya have announced a number of power upgrade projects.
Rwanda recently announced that it will meet its 2017 target of increasing access to electricity to 70 per cent of the country’s population from 22 per cent currently.
The country’s energy sector strategy plan 2013-18 projects an electricity demand of 563MW to be generated from a sustainable generation mix of hydro, methane, geothermal and solar, gradually phasing out thermal power by the end of 2017.
Last week, James Musoni, Rwanda’s Minister of Infrastructure, said that the country was working hard to streamline investment procedures in the power sector, aimed at attracting the private sector.
“The government through the Rwanda Development Board plans to achieve an additional 408MW by 2018. We want to stand out in all the key investment areas. Energy costs have been our undoing especially when it comes to attracting investments. We want to reverse this,” Mr Musoni said at an investor’s conference in Kigali targeting the energy sector.
According to the World Bank’s Ease of Doing Business report, Rwanda’s energy is expensive and limited, with electricity costing 22 US cents per kWh compared with 8 US cents-10 US cents in the rest of the region.
Consumers in Uganda and Tanzania pay 11.8 and 7.4 US cents per kilowatt of electricity respectively, while in Kenya the cost is 25.7 US cents.
The 2013 World Bank electricity consumption figures rank Rwanda’s per capita energy consumption at 25.78 kilowatts, Burundi’s at 18.34 kilowatts, Uganda’s at 65.94 kilowatts, Tanzania’s at 76.50 kilowatts and Kenya’s at 128.24 kilowatts.
Rwanda’s electricity generation more than doubled, from 45MW to 110.8MW, between 2005 and 2013, increasing access from 2 per cent to 22 per cent of the population.
Currently, Rwanda is planning a number of energy projects including the $300 million 80MW Rusumo hydroelectric project to be constructed on Kagera River, the $450 million 147MW Rusizi lll hydro project, and a 200MW methane gas concession in Lake Kivu.
“We also plan to construct other domestic hydropower plants with a 150MW installed capacity and various high voltage transmission lines to evacuate generated electric power for stable and reliable power supply to manufactures. This is why we are looking for $5 billion energy investments through public-private partnerships,” said Mr Musoni.
Mr Musoni said that in the short term, the country will be looking to its neighbours to import cheaper power to meet the energy demand.
“We will be importing cheaper power from East African Power Pool member states which will help strengthen bilateral power trade,” said Mr Musoni.
Rwanda is also to benefit from a $6.2 million loan from the Netherlands that will go towards the third phase of the Energy Access and Rollout Program (EARP3). The money will be used to speed up a number of projects.
“We are supporting Rwanda in its energy projects so that it can meet the demand of investors,” said Leoni Cuelenaere, the Netherlands ambassador to Rwanda, during the grant-signing ceremony last month.
“Rwanda has shown a desire to develop and we need to support it in attracting more private sector investments. It needs to have more people connected to the grid.”
World Bank director for East Africa Johannes Zutt said that Rwanda has a huge demand for energy because of its improved business environment that hFas seen investors flock into the country.
“The country needs the right regulatory environment to attract investors into its energy sector. Its energy deficit remains a major constraint to private investment,” Mr Zutt said.
Tanzania has also disclosed its energy strategic plan that will see it generate up to 15,000MW of power by 2025.
Tanzania’s Minister for Energy and Minerals, Sospeter Mhongo, said that the current electricity consumption in the country, which stands at just 100 units per person, is way too low when compared with say the 4,400 figure for South Africa.
“We are trying to improve the electricity situation in the country by increasing the rate to 3,000 units by 2025. We have had problems of power fluctuations and we are addressing these by constructing a power transmission line that will connect the national power grid with Kenya’s,” said Prof Mhongo.
Tanzania will thus spend $228 million to construct a 400kV power transmission line that will connect its national power grid to Kenya’s through Namanga.
The project will interconnect Zambia, Tanzania and Kenya through Isinya, Namanga, Arusha, Singida and Manyara. The project, Prof Mhongo said, is set to start early next year and is expected to be complete by the end of 2016.
According to the Kenya Electricity Transmission Company (Ketraco), the proposed project includes the construction and operation of a 510km-400kV interconnection power line.
It is expected that the interconnection will start from a proposed Ketraco 400kV sub-stations at Isinya in Kenya, and then follow the alignment established under the Nairobi-Arusha line study up to Arusha in Tanzania. From Arusha, the line will continue to Singida, where a 400kV substation is planned by the Tanzania Electric Supply Company.
“We have made positive progress in the implementation of power generation and distribution projects countrywide. We are optimistic that the interconnection with Kenya will help deal with power fluctuations. We are also looking at increasing the inter-country power business with Kenya,” said Prof Mhongo.
In a statement, Ketraco said that the Kenya-Tanzania interconnection is to become a critical link in a future regional power pool, facilitating power exchange and the development and integration of electricity markets between Burundi, DR Congo, Rwanda, Uganda, Kenya and Tanzania.
In the past few months, however, Kenya has largely gone slow on exporting power to its neighbours as it seeks ways to balance power source shifts.
Since January this year, the country has only exported 12.63 million kilowatts to Uganda and Tanzania against an import of 66.91 million kilowatts from the same countries.
Poor electricity framework
In September, the Global Competitiveness Report released by the World Economic Forum noted that Kenya’s overall competitiveness is held back by a poor electricity framework, which hinders its long-term economic growth, particularly in view of its transition towards middle-income status.
“The country’s infrastructure, particularly electricity, does not meet the needs of Kenya as the largest East African economy, and remains an area of serious concern,” the report says.
In August, Kenya’s Energy and Petroleum Principal Secretary Joseph Njoroge said that by the end of this year, key geothermal power projects will be completed and a total of 280MW will be injected into the power system from four power plants.
Kenya is targeting an added installed geothermal electricity generation capacity of 3,533MW, 1,564MW of hydropower and 1,265.5MW of wind energy by 2016.
The country added 140MW of geothermal into the grid between July and August, a further 70MW in September, and an additional 70MW in October.
Last week, the Kenya Electricity Generating Company (KenGen) connected the Olkaria I unit five to the national grid, paving the way for the completion of the 280MW geothermal power project.
The unit, still being tested, is now feeding 52.5MW to the national grid and marks the final phase in what is seen as a major step towards significantly lowering the cost of electricity in the country.
“On Monday [November 17], we achieved a major milestone on the 280MW project when unit five was synchronised with the national grid. This is the last of the four 70MW units in the 280MW geothermal project,” said KenGen chief executive Albert Mugo.
Early this year, Uganda also said that it was working towards increasing electricity supply to the national grid in order to meet the additional demand from its domestic and commercial users.
Uganda’s current generation capacity stands at 801MW while the total power generation stands at 535MW against a peak demand of 520MW.
The country expects this to improve upon the completion of the Isimba dam project that will add 183MW to the national grid by 2017, and the Karuma project that is expected to add 600MW in 2019.
