Category Archives: Rwanda Energy Sector

Fitch Lifts Outlook on Rwanda on Economic Growth

Fitch Ratings revised Rwanda’s Outlook to ‘Positive’ from ‘Stable’ while simultaneously affirming Rwanda’s long-term foreign and local currency Issuer Default Rating (IDR) at ‘B’ and short-term foreign currency IDR at ‘B’. Fitch has also affirmed Rwanda’s Country Ceiling at ‘B’.

According to Fitch ratings, the revision of the outlook from stable to positive reflects continuing rapid and inclusive GDP growth in the future, high governance standards relative to regional peers, marked improvements in poverty reduction that attracted high levels of international support, and low public and external debt.

A sovereign rating indicates the rating agency’s opinion of a country’s credit worthiness, or in other words ability and willingness to meet its financial obligations in timely manner. Credit ratings, as opinions on vulnerability to default, do not necessarily imply a specific likelihood of a country’s defaulting on its payment.

This year’s rating is the fourth following the first in 2006, the second in 2010 and the third in 2011. At ‘B’, Rwanda’s rating is within the range of regional countries. A ‘Positive” outlook may imply to a certain extent possibility of rating upgrade provided continued positive trends in factors that triggered the upgrade in the outlook.

Rwanda Gets U.S $50 Million for Poverty Fight

Kigali — The World bank has approved a grant of $50m aimed at bolstering Rwanda’s poverty eradication efforts.

It fund will also see Rwandans cushioned from the full impact of shocks, from unemployment or illness to sudden natural disasters.Carolyn Turk, World Bank Country Manager for Rwanda said that while Rwanda has pushed back poverty dramatically in the past decade, it is still one of the world’s poorest countries.

“We are happy to continue supporting Rwanda’s efforts to manage its social safety net programs more efficiently, so that poor people can withstand economic and climatic shocks better and benefit more from economic growth,” she said

Rwanda has recently seen a record decline in poverty, from 57 percent in 2006 to 45% in 2011. The government has partly attributed this success to its social safety net programs.

Opec, Rwanda Sign Rfw8 Billion Power Project Loan Deal

RWANDA HAS acquired a $12m (about Rwf7.9b) loan from the Organisation of the Petroleum Exporting Countries’ (OPEC) Fund for International Development (OFID) to finance the country’s electricity expansion programme.

Suleiman Al-Herbish, the fund director general, and Ronald Nkusi, the director for external finance in the Ministry of Finance and Economic Planning, signed the deal that was finalised on Tuesday at OPEC’s headquarters in Vienna.

The money would fund extension works of the Rukarara hydro-power plant transmission lines, Nkusi said in a statement. The power plant, located in Nyamagabe district, Southern Province, currently produces about 9MW at peak capacity.

“The project will include a 30km transmission line from Rukarara to Kilinda and will enable the efficient dispatching of the Rukarara generated electricity, which currently serves only the Southern Province,” he said. “It will be completed in one year and will contribute significantly to achieving the Economic Development and Poverty Reduction Strategy target for electricity access to the masses.” Rwanda targets to connect 50 per cent households to electricity by 2017 from a paltry 16 per cent currently.

In an earlier interview, the Energy, Water and Sanitation Authority director general, Yves Muyange, said his body would embark on connecting 100,000 households to the national grid annually to achieve the country’s target.

Established in 1976, OFID operates as a multilateral development finance institution by OPEC member countries, with the objective of to reinforcing financial co-operation between OPEC members and other developing countries.

Rwanda Is Ninth Fastest Growing Economy Globally

Rwanda will be one of the top 10 fastest-growing economies in the world this year even as it braves challenges presented by aid cuts.

Last year, Germany, the US, Britain and the EU suspended part of their budget support for this year over allegation that the country was helping M23 rebels in the DR Congo

The Economist, in its latest report on global economic trends for 2013, indicated that Rwanda’s economy would grow at 7.8 per cent this year, making the country the ninth fastest-growing economy in the world and the second-best in sub-Saharan Africa.

In the global ranking of what it terms as ‘the top growers’, the paper has Mongolia, with a projected growth rate of 18.1 per cent, on top of the list followed by Macau at 13.5 per cent. Libya leads in Africa at 12.2 per cent. In sub-Saharan Africa, Mozambique is projected to register the highest growth at 8.2 per cent, with Rwanda, which is seen growing; at 7.8 per cent, on its heels.

This projection echoes that of the economic planners at the Ministry of Finance and Economic Planning.

The Economist termed Rwanda’s ranking, along with other star performers of the world, as part of a ‘more cheerful segment’ of an otherwise gloomy global economic outlook.

The newspaper also lauded Rwanda as one of the countries that have made tremendous progress over the last 10 years, enabling it to transform its economy towards a service-oriented one.

While reacting to the report, the Rwanda Development Board (RDB) acting chief executive officer, Clare Akamanzi, affirmed that the country would this year achieve or even surpass its medium-term plan economic objectives.

“Rwanda’s economy has been on track, growing at over 7 per cent annually; therefore, the fundamentals for achieving this target are already in place. That is why analysts at The Economist and others rank Rwanda highly,” Akamanzi said.

The RDB Chief added: “What is most important for us is to increasingly build our economy’s competitiveness to attract more private sector investments. This is a key input for economic growth. ”

A Ministry of Trade and Industry 2012 preliminary economic performance review shows that the country’s investment rate (the per cent of investment to the gross domestic product – GDP) reached 25 per cent, surpassing the 21 per cent target set earlier.

Another key fundamental was the growth of exports that reached $429m, higher than the $344m targeted. The robust growth of the tourism sector was another factor.

The sector raked-in $263m in the 2011/12 period, exceeding the earlier target of $244m. This was also reflected on strong growth of Rwanda’s services sector.

Although the Central Bank had pegged the inflation rate at 7.5 per cent, it was contained at a commendable 4.6 per cent. Rwanda, The economist noted, achieved a “hat-trick” of rapid growth, sharp poverty reduction and lessened income inequality.

“Because of this, many donors were reluctant to stop or reduce aid, whatever the arguments that came up over the eastern DR Congo saga,” the publications added.

This performance is a good indicator that the suspension of aid would most likely not hurt the country as it continues guiding its economy towards its chosen path of transformation.

“Rwanda, our beautiful and dear country / Adorned of hills, lakes and volcanoes / Motherland, would be always filled of happiness…”

Second Phase of Methane Gas Extraction Due

Plans to kick start the second phase of methane gas extraction from Lake Kivu to produce 75MW of electricity are in high gear after it emerged that the country’s first fruits from the project are due in March this year.

Despite financial hitches that derailed the project’s initial stages, Kivuwatt, a subsidiary of Contour Global with a 25-year concession deal on Lake Kivu, finally announced last month that Rwanda’s electricity grid will be boosted by 25MW from the methane gas project in March. In an interview with The New Times on Friday, the Director General of Energy, Water and Sanitation Authority (EWSA), Yves Muyange, said that Kivuwatt has already began plans for the second phase, which will see an additional 75MW produced by the end of 2012.

“The first phase of the project cost US$142 million but the cost for the second phase is not yet known. They (Kivuwatt) are working on the financial structure of the second phase so as to immediately usher in the complete production of 100MW from methane gas in Lake Kivu as soon as possible. Once they are done, they will present the structure to us for assessment,” Muyange said.

“This is an important project that is set to boost energy production and consumption, as well as push Rwanda towards achieving its vision 2017 to avail electricity to 50 per cent of the population.

Currently, only 16 per cent of the population has access to electricity.

Gerard Rusile, the Kivuwatt Project Officer, said that the infrastructure was now in place to ensure that the project is undisturbed by either financial or environmental hitches that in the past inevitably shifted its production deadline from 2012 to 2013.

“There is good progress and the designs are all in place- this is a good step if you put in context the complications involved in extracting methane gas from a unique lake like Kivu. Also important is that the financing groups are all ready and willing to see the project through.”

The project, is being financed by a number of banks such as Africa Development Bank and once complete, Rwanda’s total energy capacity will double from the current 100MW.

The Energy Authority On Track, but Needs More Support

THE Energy Water and Sanitation Authority (EWSA) has re-affirmed that the country’s target to connect 50 per cent homes to electricity in the next four years is within reach. EWSA expects to connect 100,000 households to the national electric grid annually to achieve the target.

Electricity is crucial in the manufacturing and small enterprise sectors. It is even more crucial for households, especially in the rural areas where there is over reliance on wood poses a source of energy. Over reliance on wood posses a grave danger for the environment. This is connected to economic poverty and environmental degradation.

Government has invested a lot in the energy sector, including diversification into different sources of energy, to generate more electricity. But more momentum is needed until the country’s energy needs are met. Access to electricity increased from 6 per cent in 2008 to 16 per cent in 2012. This means that in only four years access to electricity by households more than doubled.

If we go by the same trend, by 2016 the current access will also have more than doubled from 16 per cent to over 48 per cent of homes connected to electricity. This will probably put Rwanda among the developing countries with the highest percentage of the population having access to electricity.

For Rwanda to achieve its vision of connecting half of the entire population with electricity within the next five years, current connection activities must be rapidly tripled to keep the target alive. But this will require support from all the stake holders. Government should take more deliberate steps to electrify, especially villages all over the country, to improve households’ livelihoods as well as reduce poverty.