East African Business Week (Kampala)
Bosco Hitimana
7 March 2009
Kigali — CountourGlobal, an American firm, has signed a 25-year, US$325 million gas-to-power deal with Rwanda.
The deal is to generate100 Megawatts of electricity from methane gas in Lake Kivu, Western Rwanda.
The gas concession and power purchase agreements signed in Kigali on March 2 after 17 months of negotiations, allow the firm to start extraction and processing of the gas into electricity and to channel it into the national power grid.
The government, through its power and water distribution company, Eletrogaz, will be selling the power to the end user, and paying back ContourGlobal.
The deal was signed by Finance and Economic Planning Minister, James Musoni and Minister of State for Energy and Water, Albert Butare and ContourGlobal's President and Chief Executive Officer (CEO), Joseph Brandt, in Kigali.
The Kivuwatt Project in Kibuye, Western Rwanda, comes on heels of a government initiated project on the same lake that is now channeling 1.8MW of power into the national grid.
"Sufficient power supply will be the underlying requirement for meeting the government's objective to massively increase access to electricity to its population and its industries," said Butare.
The project will relieve Rwandans of hefty power bills resulting from dependence on costly diesel and heavy fuel oils to generate power.
It will bring down government's expenditure on power to as little as US12 cents down from between 35cents and 40 cents per megawatt per hour from diesel and heavy fuel oils.
This will also cut the end user price from US24 cents to US17 cents per 1MW/hour, according to the state minister.
"Lake Kivu's gas will provide a clean source of power generation for a region suffering from extreme shortages of reliable and affordable electricity. Utilization of the lake's gas resource will also serve to reduce the risk of an uncontrolled release of the lake's gas," ContourGlobal's President, Joseph Brandt said in a release.
ContourGlobal is a New York based energy investment firm that develops and operates electric and combined heat and power businesses around the world for both governments and private companies.
The firm will develop, construct and operate a platform based gas extraction system that will extract methane gas from a depth of 350 metres.
The gas will be processed and transported by pipeline to ContourGlobal's power plant being developed in Kibuye, western Rwanda.
The power plant is the first independent power project developed in Rwanda and will more than double the amount of electricity currently generated inside the country.
ContourGlobal will start by implementing the first phase of the project, expected to generate 25MW next year. The second phase expected to be ready by 2012, will bring in additional 75 MW of power
Currently 6% of Rwandan population has access to electricity, with the new project, and other initiatives; the government hopes 16% to access electricity by 2012.
The government's wish is to serve the electricity needs of its people and sell surplus power to neighbours Burundi, Uganda and DR Congo with whom rwanda shares Lake Kivu.
ContourGlobal will use a portion of the investment to create a port facility in Kibuye that will be built not only to support its works but also be used for receiving and shipping goods across the lake.
Part of the $325 investments will be used to transport equipments from abroad to Kivuwatt project in Kibuye.
Methane gas was discovered in the deep waters of Lake Kivu, on the border between the Rwanda and the Congo in 1936. The lake, which is located at an altitude of 1462m, is 485m deep and has a surface area of 2400 square kilometers.
Studies have uncovered approximately 250-300 cubic kilometres of dissolved carbon dioxide and 55-60 cubic kilometres of methane gas accumulated and trapped at significant depth in the lake, and these quantities are increasing on a daily basis.
The scientific community has predicted that, without a reduction of methane and carbon dioxide, there is a real risk of an explosive release of large quantities of these gases within the next 100-200 years, thus killing people around the lake.
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