In East Africa, Energy Development Corporation Ltd, a subsidiary of Rwanda Energy Group Ltd, has proposed to review the present electricity tariff structure of both domestic and industrial users.
The proposal is based on a combination of increasing generation capacity, diversification of energy sources, reducing the proportion of thermal power in the energy mix and negotiating better feed in tariffs, The East African reported.
The managing director at the Energy Development Corporation Ltd, Emmanuel Kamanzi, said: “We have substantially increased electricity generation. Therefore, there is a need to make power affordable for domestic and industrial users.”
It is reported that the government hopes to realise a 50% drop in power tariffs due to energy from cheaper sources that are feeding into the grid.
High electricity tariffs
According to the media, regional economies are struggling with high electricity tariffs, and have as a result put manufacturers in a less competitive position relative to cheap imports from Asia and other Comesa member countries (Common Market for Eastern and Southern Africa).
The Rwanda Private Sector Federation, the Kenya Manufacturers Association and the Uganda Manufacturers Association have all cited high energy costs as contributing to high production costs, media reported.
Sources only known to The East African stated that if the new electricity tariff structure succeeds, manufacturers in Rwanda could pay an average $0.12/kWh, a sharp drop from the current average tariff of $0.24/kWh.
The media quoted statistics from Rwanda Energy Group, which states that government has recently scaled down the use of expensive heavy fuel oil plants, which are contributing only 37.8% of available energy, down from more than 50%.
The heavy dependency on heavy fuel oil power plants resulted in the country spending $37 million annually in subsidies to make power more affordable for end users, further piling pressure on the budget, media further noted.
New electricity tariff structure
Affordable power is reported will be generated through a 80MW peat-fuelled plant, estimated to cost $260 million, which is being developed by Hakan, a private Turkish company.
Another development that is expected to boost affordable power is the 80MW Rusumo Hydroelectric Project, due for completion by 2019.
Burundi, Tanzania and Rwanda will share the power generation at Rusumo equally.
Featured image: Kempton Express