Rwanda’s utility reform process: “more efficiency, better and quick service delivery”

WilsonExclusive interview with Wilson Karegyeya, National Investment Counterpart, Investment Unit, Energy Development Company, Rwanda Energy Group.  REG is the host utility to iPAD Rwanda Power & Infrastructure Investment Forum that is taking place in Kigali from 3-4 November.

Let’s start with an update on the reform of the energy and water organisations in Rwanda?
Rwanda Energy Group today was still EWSA two months ago.  EWSA was the Energy, Water and Sanitation Authority, a government parastatal, which they thought splitting the organisation would ensure more efficiency, better and quick service delivery.  So it was split two months ago, forming two corporations: one for water, the Water and Sanitation Corporation, headed by a Managing Director. It was a department in EWSA and is now a standalone company and still 100% owned by government.

There is also the Rwanda Energy Group (REG), which will specifically deal with energy projects.  The REG also has two subsidiaries, the Energy Development Corporation Ltd and the Utility Corporation.  The Energy Development Corporation will mainly address generation and new investments.

What do you hope to achieve in the next 12 months?
We have now embarked on asset separation; EWSA had a lot of assets that need to be shared between the water company and the electricity company. There are issues of accounts and fixed assets like land and buildings that need to be split and shared. That is what the new companies are doing right now. We are being assisted by PriceWaterhouse and some other specialised companies to make sure the reform is done well for better service delivery.

And we expect, of course, more specialisation for these companies.  The water company will now specialise in making sure that they deliver clean water to the population.  They will be less distracted because they will be mainly focused on providing clean water.  And the electricity company will now not be overstretched, looking into water and electricity but looking specifically into electricity projects, so I expect more focus for these companies that will lead to better service delivery.

What is your background?
I studied Social Sciences specialising in political science/ international relations and then accounting – both at Makerere University in Uganda.  After my first degree I worked as an accountant for seven years, before I went to the UK to do an MBA  in management at the University of Wales.  I then worked in the UK for about six years before returning to Rwanda.  Upon returning to Rwanda, I worked for the Rwanda Development Board, coordinating business development services in the Country.  RDB looks at the country’s investments. In September 2012 I joined EWSA in its specialised unit dealing with energy and water investments.

The energy projects that you will invest in, can you highlight specific challenges and how you will overcome them?
One challenge is that we were used to government investments where government  invests in energy projects. We have now adopted an approach to involve the private sector more in the generation phase of it: where we identify projects that need to be developed, advertise them, attract private investors, (IPPs) and  negotiate the power purchase agreements with them, once we  agree and sign the contract, the project is up and running.  Where I see challenges is in the contract management.  It is an issue that we are not used to working with IPPs.  Although you sign a PPA with an independent power producer, it is more about managing the contract from day one up to the last day of the contract.  So that is a challenge there but we hope to overcome it by training our staff to make sure they know how to deal with IPPs, know what to expect and when and what the IPP has to deliver.  That is very important.

In terms of generation capacity in Rwanda, what is currently available and how much are you projecting?
Currently we are at 110 megawatts capacity and we expect to generate up to 563 megawatts by 2017. That is the target we have. There are on-going projects that will enable us achieve this targeted megawatts and some are nearing completion.  We have also taken the direction of utilising the regional interconnectors to be able to share power with the neighbouring countries.  We are currently negotiating a PPA with Kenya aiming at purchasing power from Kenya through Uganda.

Power generation goes hand in hand with other infrastructure development such as roads, rail etc. what are the plans there?
In the transmission sector we have also started using private developers. We recently advertised a tender to attract investors to come and do the transmission lines and improve the networks as we expand the capacity.  Of course there is a need to improve the network so we are doing that concurrently.

What is a day like in Rwanda in terms of electricity supply?
Until recently there weren’t many power outages in Rwanda. But now industry is growing and the demand for energy is growing and we are striving every day to increase the capacity to serve all our customers, be it investors, industrial or domestic.  Of course you get investors who come to us saying “I want 5 megawatts, I want 15 megawatts, I want up to 10 megawatts”, so you have to work hard to make sure you use all the resources available to provide such electricity.

A recent example is a new cement factory that has asked for up 15 megawatts, and we have a total capacity of 110 megawatts for the whole country. So you can imagine how hard we have to work. The good news is that we have secured the power the factory requires.

Who looks at tariffs and the regulation around tariffs?
It is RURA (the Rwanda Utility Regulatory Agency). But if we are attracting investors for projects above 5MW, we negotiate a tariff. For projects below 5 megawatts, there is a feed in tariff set by RURA. For big projects, Rwanda Energy Group negotiates with the developer and agrees a tariff at which it will supply electricity.

What is the situation with residential access to power?
For now, the residential users are connected and satisfied.  The challenge we are facing is the new industries that are emerging. Otherwise the domestic customers had no issues thus far.  Perhaps they might have to start competing for the insufficient power that we have – to share this among the commercial and domestic clients that we have. But we are working very hard to bridge the demand gap that is growing day by day.

What do you see happening in the East African region in the next five years?
My personal view is that if the current trend of cooperation among the East African member States continues, I see success.  When I look at the engagement between member countries, sharing power, that is success.  When I see the opening of borders for trade, that is success, and opening of borders for human capital, that is success.  If this trend is maintained I see a powerful East African Community.