Utility Management ServicesUtility Management ServicesUtility Management Servicesas part ofas part ofas part of

Restructuring, Privatisation andRestructuring, Privatisation andRestructuring, Privatisation andInstitutional Reforms of theInstitutional Reforms of theInstitutional Reforms of the

Management Contract for ELECTROGAZManagement Contract for ELECTROGAZManagement Contract for ELECTROGAZ

Institutional Reforms of theInstitutional Reforms of theInstitutional Reforms of theElectricity and Water SectorsElectricity and Water SectorsElectricity and Water Sectors

Dr. Hans Dieter HermesConference on Partnership & Investment Opportunitiesin Transport, Infrastructure and Public Utilities in Africa

15 Feb. 2005, Hamburg

� Long term efforts have been undertaken by the Government of Rwanda towards the Energy and Water Sector Reform

BackgroundBackground

Objectives: Operation

� The Energy and Water Sector Reform is embedded in the privatisation efforts for infrastructure in Rwanda

� This is the first step of the Privatisation process of the state-owned company Electrogaz

National Production Sites

BackgroundThe Rwandan Electricity System

100 %based

onHydropower

Lahmeyer International has a long standing history�As a privately operated company� Independent from any association or affiliation

Lahmeyer Internationalas Private Utility Operator

Objectives: Operation

� Independent from any association or affiliation with manufacturers.

�Exercising its business successfully since 1966� Lahmeyer International has successfully been

providing engineering services and management advice to utility companies, funding agencies and private investors and operators.

� Any form of Privatisation can only be implemented with countries Government and population

� LI is a partner to develop ELECTROGAZ into a

Our understanding of Utility Management

Objectives: Operation

� LI is a partner to develop ELECTROGAZ into a viable utility

� LI works with the people of ELECTROGAZ and with the people of Rwanda

� Reliable Management is a precondition to activate necessary investments in infrastructure

The major objective of the five years Management contract for the Rwandan Water and Electric Power Utility ELECTROGAZ is to achieve on the long run

�Significant reduction in technical and commercial

Objectives of the Contract in Rwanda

Objectives: Operation

�Significant reduction in technical and commercial losses

�Extensive improvements in operational efficiency� Increase access of the population to water and

power services� Financial self-sufficiency of ELECTROGAZ

� Operational Improvement Plan

� Commercial Improvement Plan

Tasks of the Utility Management Contract

Objectives: Operation

� Tariff Policy Development Plan

� Technical Improvement (Power, Water)

� Training Program and Staff Development

� Financial Improvement Plan

Background Overuse of Hydropower – Ntaruka, usage in MWh

2,500

3,000

3,500

4,000

4,500

5,000

MW

h/m

onth

-

500

1,000

1,500

2,000

2,500

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

MW

h/m

onth

Monthly Actual

Monthly design

Background Overuse of Hydropower - Lake Bulera (Ntaruka)

1,862.0

1,862.5

1,863.0

1,863.5

1,864.0

1,864.5

Leve

l m

Overuse of Rwanda’s main power stations has led to a draw-down of Reservoirs (unsustainable production levels )

1,859.5

1,860.0

1,860.5

1,861.0

1,861.5

1,862.0

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Leve

l m

MaximumActualMinimum

Background Water level in Bulera Lake

� Electricity production is not sustainable (depending on rainfall)

� Not sufficient rain despite rainy season

Current Situation and Short Term Future

� Not sufficient rain despite rainy season

� Generation to be reduced by 80-130MWh per day

Electrogaz Supply 15-21 March 2004

Load shedding would need to be increasedCurrent Situation and Short Term Future

35

40

45

50

MW

Time

-

5

10

15

20

25

30

1:00

3:00

5:00

7:00

9:00

11:0

0

13:0

0

15:0

0

17:0

0

19:0

0

21:0

0

23:0

0

Peak Mar 03 plus 9% Ave. 15-21 Mar 04

Without load shedding

with load shedding

� Loss of income for Government (taxes)

� Loss of employment in the Rwanda industries

� Loss of reputation of Rwanda for Tourism and as

Possible Future Implications

a Conference destination

� Damage to investor confidence

� Decrease of Security

Rwanda’s Electricity Demand (2003-2020)

Pea

k D

eman

d

80

100

120

140

160

180

200[MW]

500

750

1000

1250

[GWh/a]Peak Demand

Energy Demand

Ene

rgy

Dem

andBulk in 2007:

caused by Single Committed Projects at Cement Industry

ELECTRICITY SHORTAGE IN RW ANDA

0

20

40

60

80

0

250

500

Ene

rgy

Dem

and

2003 2005 2010 2015 2020YearsFacts:� The average Energy Demand Growth Rate is 8 % p.a.� An extensive electricity generation expansion progr am is

required

Planned Structure of Rwanda’s Energy Supply System until 2020

� Less Load Shedding in 2005, full supply from 2006

� System Reserve according to International Standards:

ELECTRICITY SHORTAGE IN RW ANDA

beginning in 2007: Adequate Back-Up-Capacity(in particular Fast Track Diesel Units)

� Electrification Rate higher than 20 per cent in 202 0

� Diversified Energy Supply System

Vision for Rwandas Electricity System in 20 years

39 %Hydro Power Domestic

32 %Hydro Power Imports

ELECTRICITY SHORTAGE IN RW ANDA

13 %Diesel Power Domestic

16 %Methane Gas Power

Domestic

� World Bank + Nordic Fund 25 Mio.$ + 6 Mio.€Emergency Project Diesel Generators (Hybrid), T&D

� African Development Bank 20 Mio.$Rehabilitation Power and Water Facilities, 10 Mio.$ each

� European Union 19 Mio.€“Karengue” Water Treatment Rehab./Extension + Infrastructure

� BADEA + OPEC Fund 10-15 Mio.$

Lessons Learnt

Results (1) Commitment of Donors

� BADEA + OPEC Fund 10-15 Mio.$Rehabilitation Hydro Power “Mukungwa”

� Netherlands 6 Mio.€Diesel Gen. Sets, Rural Electrification

� Belgium 4 Mio.€Substations, Rehabilitation of Micro Hydro Power

� Germany ???

Discussed:� World Bank 15-25 Mio.$

Mid/long term Energy Projects, Methane Gas Energy

� The Management Contract is the means to activate an d steer large infrastructure investments needed

� Tax exemptions for Diesel Fuel could be achieved

� The Electricity Tariff has successfully been adjust ed

Lessons Learnt

Results (2)

� The Electricity Tariff has successfully been adjust ed (from 42 FRW to 81 FRW, still flat) without major r iots

� A new Tariff Structure is being prepared and discus sed

� Power Purchase Agreements are being revisited

Lessons Learnt

Thank you for your attentionThank you for your attention