The 25-year power purchase agreement for the 55-megawatt Methane Gas Project in Lake Kivu, Western Province, was signed on Tuesday in Kigali between Symbion Power chief executive Paul Hinks, REG chief executive Jean-Bosco Mugiraneza, and the Minister for Infrastructure, James Musoni
The recently-raised power tariffs might not stay long that way as efforts to reverse the trend gained impetus this week with a new power purchase agreement signed between American energy firm, Symbion Power, and Rwanda Energy Group (REG).
The agreement, according to Musoni, is expected to help reduce power tariff and improve the country’s quality of energy.
At only 9.8 cents per unit, Minister Musoni is confident the rate is affordable when compared to about 18 cents many industrialists pay for every unit of power they consume.
“The deal means more affordable and stable power which will translate into faster economic development,” Musoni said. He urged both parties to ensure a faster implementation of what was agreed on.
The deal comes three months after government increased power tariffs by 35 per cent for low voltage users, including residential and non-residential consumers (to Rwf182 per kilowatt, from Rwf134 per kilowatt). However, charges for industrial power consumers were not changed and remained at Rwf126 per kilowatt.
More about the agreement
According to the agreement, the first barge is expected to provide at least 14 megawatts of electricity 15 months after the project reaches financial close. Then full 50 megawatts will be commissioned within 36 months after reaching financial close.
Lake Kivu is a reserve for an estimated 55 billion cubic meters of methane gas deposits. The total power generation potential of this resource has been conservatively estimated at more than 500 megawatts over 40 years.
Under the purchase agreement, Symbion Power will begin implementation activities, including detailed design, procurement and permitting for the project located on the shores of Lake Kivu near Rubavu District.
The power project also reduces the risk of gases trapped in the deep layers of the lake rising to the surface and endangering the surrounding communities.
Symbion Power’s Hinks said the deal could help save government billions of cash spent on importing heavy fuels.
“Unlocking Lake Kivu’s energy potential is a game changer for Rwanda; our team is working hard to turn this resource into affordable, reliable power for Rwandan people,” Hinks said.
“We work with governments across sub-Saharan Africa to replace expensive, imported fuel with indigenous fuel sources to produce electricity and are honoured to have the opportunity to do that here in Rwanda as a part of our commitment to President Obama’s Power Africa initiative.”
Symbion Power will extract methane gas from the depths of the lake in a safe and controlled manner and process the gas into electricity onshore, he added.
The project underscores Symbion’s commitment to investing in sub-Saharan Africa’s power sector through close cooperation and partnership with host country governments.
“We are working closely with the government of Rwanda and its regulatory agencies to ensure that the Lake Kivu project delivers affordable energy in an efficient and environmentally responsible manner,” he said.
Mugiraneza said the power project is a key part of Rwanda’s plan to increase generation capacity.
“We have confidence that the technology is working on a large scale and will help boost our plan to generate more power,” Mugiraneza said.
Base load power, generated from the lake resource by Symbion Power, is expected to help boost Rwanda’s electricity supply and lower the overall cost of electricity.
In addition to providing Rwandans with more electricity, the project will also help alleviate the risk of an uncontrolled release of gas from the lake.
Francis Gatare, the chief executive officer Rwanda Development Board, said investing in energy has a high multiplier effect on other sectors of the economy.
“Investing in cost effective energy is crucial for our competitiveness; it will also help attract more investors into the country and spark economic development,” Gatare said.
Rwanda’s power generation capacity has increased by over 86 megawatts, in the last 18 months alone and currently stands at more than 185 megawatts.
The plan is to increase this capacity to at least 563 megawatts by 2018.
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