Technology Review
Image source: Technology Review
In Rwanda, Kibuye Power 1, a 3.6MW methane gas-fired thermal power plant on Lake Kivu, is under liquidation after failing to pay its debts.

The Kibuye Power 1 liquidation, which follows last year’s ruling by the Rwanda Commercial High Court, seeks to pave the way for a new investor to take over the plant, and increase its generation capacity to 100MW to meet the projected demand.

According to The East Africa, Anita Mugeni, the liquidator appointed by the Court to oversee the plants liquidation process, could not divulge the list of creditors. However, advertisements have been placed inviting interested buyers to submit their expression of interest for the purchase of the gas extraction platform and other assets of the company under liquidation.

“It is the gas extraction platform and other assets of the company under liquidation,” Mugeni said, adding that the money raised from the liquidation will be used to pay creditors.

Shareholder seeks arbitration on Kibuye Power 1

However, UK-based energy developer, Dane Associates, which holds a 70% shareholding in the Kibuye Power 1 project, is currently involved in a legal battle with the Rwandan government, accusing it of breaching the contractual obligation in the project.

[quote]Under the contract the two parties entered into, it was agreed that should a dispute arise they would seek arbitration through the International Court of Commerce Arbitration, the East Africa reported.

The head of the legal department in the Ministry of Justice, Theophille Mbonera, said the case will come up for hearing this month, but that the decision of the Rwanda courts to wind up Kibuye Power 1 is still binding and the decision of the International Court of Commerce Arbitration will have little bearing on the matter.

In 2005, the Rwandan government accused Dane Associates of allegedly failing to account for $3 million in pre-project costs of the Kibuye Power 1 project.

This coupled with delayed execution of the project even after the two parties had entered a concession and power purchase agreements lead to unending court battles.

The East Africa stated that analysts believe the ongoing court cases have impacted negatively on the company’s business plans and specifically the exploitation of methane to produce electricity resulting in the country investing in expensive sources of power.

Increasing capacity for Kibuye Power 1

The Kibuye Power 1, with an installed capacity for 5MW, was built and designed as a pilot project to demonstrate the production of electricity using gas extraction technology. Furthermore, Rwanda is aiming to increase the country’s current installed capacity estimated at 185MW to 563MW by 2017.

Rwanda seeks to diversify its energy sources to address the current shortage of power and reduce its power tariffs, which are the highest in the region at $0.24 per kWh. In comparison, Kenyans pay $0.15, Ugandans $0.17 and Tanzanians $0.05 per kWh.

Rwanda has prioritised methane gas generation partly because it is cheaper, cleaner and the technology available to exploit the resource is now readily available in the country.

Home page pic credit: Technology Review