“If the investment environment with practical procedures is established, I am sure Rwanda would be one of the best investment destinations in Africa.”
Exclusive interview with Toshiyuki Hayashi, senior advisor to the Japan International Cooperation Agency (JICA). During the upcoming iPAD Rwanda Power & Infrastructure Forum in Kigali from 3-4 November, Mr Hayashi is a speaker during the “Generation Mix” conference track and will address the delegates on a “Master plan of electricity and geothermal development study”.
Let’s start with some background on and the goals of JICA?
Japan International Cooperation Agency (JICA) is an agency of Japanese Government in charge of implementing government’s Official Development Assistance (ODA). JICA’s vison is ”Inclusive Dynamic Development”, and missions are (a) “Addressing the global agenda,” (b) ”Reducing poverty through equitable growth,” (c) ”Improving governance,” and (d) ”Achieving human security.” Throughout the world, JICA has 92 country and regional offices, and there are 26 in Sub-Sahara Africa including Rwanda. In order to attain our mission, we have three means of cooperation, technical cooperation, grant aid and soft loan.
The purpose of technical cooperation is to develop necessary capacity our counter-part organization has to have so that they will be able to plan and implement their work effectively and efficiently. Grant aid is for constructing facilities and infrastructures that are urgently needed for improving lives of people such as school buildings, drinking water facilities, and substations and distribution lines. Soft loan is for planning and construction of large scale projects such as trunk roads, sea ports, and conventional thermal and hydropower stations. For further information, please visit our internet site http://www.jica.go.jp/english/
During World War II, Japan fought against the Allied Forces and was completely defeated in 1945. Nearly all infrastructures and industries in Japan were destroyed, and Japan had to start its reconstruction and development from scratch. This experience is one of important features that are incorporated into Japanese Official Development Assistance.
Can you give us an idea of the programs that JICA is running in Rwanda?
JICA’s Basic Policy of Assistance in Rwanda is “Promotion of Sustainable Growth (Transformation to middle income country).” Under the basic policy, JICA works for four priority areas in Rwanda, Priority Area 1 Economic Infrastructure Development, Priority Area 2 Agricultural Development (Promotion of Market Oriented and Value Added Agriculture), Priority Area 3 Social Service Improvement (Safe Water Supply), and Priority Area 4 Human Resource Development for Sustaining Country Growth (Science and Technology Education and Training). Under Priority Area 1, JICA works for infrastructure and energy development. In energy and power sector, JICA undertook technical cooperation project for Capacity Building of Efficient Power Supply and Development Phase 1 in collaboration with EWSA from 2009 till 2013, and Phase 2 is under planning.
JICA also undertook grant aid project for Improvement of Substations and Distribution Networks Phase 1, which was completed in 2013, and Phase 2 Preparatory Study is scheduled next year. At present, JICA is undertaking technical cooperation project for the Preparation of Electricity Development Plan for Sustainable Geothermal Energy Development in Rwanda (Master Plan Study for National Power System and Geothermal Power Development) in collaboration with REG (Rwanda Energy Group), in addition to the assignment of Senior Energy Advisor for Energy.
For increased regional connectivity through trunk roads, JICA provided grant aid for constructing Rusumo Bridge and One Stop Boarder Post facilities, which will be completed in mid-November 2014, in addition to the technical cooperation project for Capacity Development of International Trade Facilitation in the Eastern African Region.
What are the main challenges currently for infrastructure and development in this country?
As I have been working for energy sector in Rwanda since 2007, I would like to talk about power industry in Rwanda. One of the serious challenges in Rwanda is human resources. Electric power industry is a modern engineering and commercial industry, which requires well trained engineers and administrators with good and long practical experience. Actually, engineers and administrators working for power industry in Rwanda have good background of education but lack enough practical experience unfortunately.
In 1994 after the genocide, I suppose the engineers and administrators working for electric power industry had to start their work from scratch. In their offices of ELECTROGAZ at that time, they might not have been able to find work guidelines, manuals, and experienced senior engineers and administrators, which was the most adverse environment for new engineers and administrators to work effectively and efficiently. Considering this background of electric power industry in Rwanda, it is very appropriate that Rwandan Government takes strong initiative to develop capacity of the energy sector.
What is the good news? Is Rwanda a good investment destination?
The good news is that EWSA (Energy, Water and Sanitation Authority) has been reformed in order to separate energy, and water & sanitation. The departure of energy from water and sanitation was really necessary. While energy is taken largely as commercial business, water and sanitation are taken as social business. As business orientation of energy is different from that of water and sanitation, it was really inappropriate to have energy, and water & sanitation in one organization.
Moreover, new companies, Rwanda Energy Group, Energy Utility Company and Energy Development Company, were established in August 2014 with more business autonomy than EWSA. An electric power industry is the industry that can and has to operate commercially, the autonomous business operation based on their responsibilities of decision making and management is the necessary environment to enhance their capability to work for their effective and efficient business.
Honestly speaking, my observation is that the investment environment for energy and power in Rwanda has not yet been well established and maintained. It is necessary to prepare, authorize and implement the investment guidelines for different generating technologies such as hydropower, peat power, gas power using Kivu methane gas and geothermal. If the investment environment with practical procedures is established, I am sure Rwanda would be one of the best investment destinations in Africa.
What advice would you give prospective investors?
I suppose investment business in power industry is dominated by commercial people, and sometimes it seems they do not put importance on initial technical feasibility. Profit making business requires sound technical basis. Even during the early stage of investigation for investment, basic technical study is recommended.
What will be your message at the iPAD Rwanda event in November?
Unlike other commercial industries, electric power industry is a unique industry technically and commercially. Government and private companies have to understand the features of this industry and the division of their roles between government and private companies; otherwise, the investment by private companies will not proceed effectively.
Because electricity is supplied through one integrated technical system, which is called national power system and consists of power stations, transmission lines, substations and distribution lines, an individual investment by a private company for a power station has to be incorporated into the national power system. This is why master plan study and the following feasibility studies are necessary.