ENERGY SECTOR IN RWANDA PRIVATE SECTOR FACILITATION FORUM

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Concept Note

1. Background

Current situation of the energy sector

Rwanda’s economic growth has steadily been growing at an average rate of 8.5%. The government plans to increase the target to 11.5% in the next five year. In order for this ambitious target to be met, one of the sectors that needs to be improved is the energy sector through the access to affordable and use of modern sources of energy.

With the above economic growth, Rwanda’s energy sector has also been growing. The current consumption rate is mainly based on biomass (used mainly for cooking) which is at 85%, petroleum products (used for transport, electricity generation and industrial use) and electricity at 4%.

Efforts to increase the above consumption rate have been put in place and the current target is to increase access to electricity to 70% through use of on grid and off grid solutions. For the above target to be met, the government plans to invest in developing different energy sources (hydro, methane, geothermal and peat) with a target of developing 563 MW by the year 2017/18. Much as the government will invest heavily in development of these resources, private sector participation is also being encouraged in all the phases of the project lifecycle, including design, build, and finance, maintain and operate.

As part of facilitating the private sector, several Initiatives were developed to assist the private sector in the development of the sector. Some of these/ facilities include;

I. ESME Trust Fund

II. PSP promoted by ENDEV

III. FONERWA

I.ESME’S trust Fund

The Energy Small and medium enterprises (ESME) Trust Fund is a facility that was setup by the Russian Federation in 2009. The Russian Federation provided US$30 million in form of a grant facility to support small and medium energy enterprises in sub-Saharan Africa. The objective of the ESME Trust Fund is to provide additional financing and technical assistance to Small and Medium Enterprises (SMEs) in selected Sub-Saharan African countries to strengthen their capacity to provide energy services to poor communities. Rwanda is one of the countries selected for support under the ESME Trust Fund with a total financing of US$3.5 million. The fund is provided through the world Bank and Managed by the Sustainable Energy Development Project (SEDP), under EWSA. The ESME fund managed by SEDP is earmarked to support the following activities in the energy sector:

(i) Capacity building to ensure quality and competitiveness of the private local investors in micro and PICO hydro power projects. This will be done through support to business training opportunities and technical assistance to the investors in question

(ii) Provide financing support to local energy investors into low cost solar electrification projects.

II. PSP in micro hydro promoted by ENDEV

The Private Sector Participation in Micro Hydro Power (PSP Hydro) project supports the development

of micro-hydro power plants between 100 kW and 500 kW that are constructed and operated by the private sector.

PSP Hydro develops the capacity small and medium-sized enterprises through provision of technical and business assistance, as well as provides limited co-financing (just enough subsidy on the investment cost to make projects viable, i.e. viability gap funding).

III. FONERWA

The National Climate change and Environmental Fund (FONERWA) is a facility that was introduced by the Government of Rwanda through which environment and climate change projects are financed. This facility is available to both public and private developers through;

 in kind support for proposal development ,

 performance based grants,

 low interest rate loans guarantees

2. Objectives of the forum

The objective of the proposed workshop includes the following among others:

 Provide information on some of the private sector opportunities for investment

 Provide information some of the support facilities for private sector

 interaction between the private sector players with government

3. Target group

The target groups to attend this forum are; all energy sector private investors and government stakeholders. This PRIVATE SECTOR FACILITATION FORUM is scheduled to take place on the 10th January 2014, at MININFRA Board room on the ground floor, starting at 8:00am.