Kigali — Rwanda's electricity tariff will shoot up by 20%, the country's regulatory body, RURA, announced last week.

The new tariff which takes effect from July 1 will mean users will have to pay between RWF112 and RWF134 per unit VAT exclusive.

François Regis Gatarayiha, the director general of Rwanda Utility Regulatory Agency (RURA) explained that the adjustment of the prices is in line with enabling the government to invest in different energy sources, a project which will require to government to reduce its subsidies on electricity from RWF24 b (US$40,201,050) to RWF17b (US$ 28,475,711).

Since 2004, Gatarayiha says the government has spent over RWFrw 60b (US$100,502,512) subsidizing electricity consumers, spending about RWF21b (US$35,175,879) in the fiscal year 2011/12 alone.

Besides, the generators consume oil worth US$ 3m per month.

"These levels of subsidies cannot be sustained in the long run as they crowd out other priority sectors of the economy and compete with funds that the government would have invested in more electricity and different energy generation projects" he explained.

Energy consumers have also increased times 4 since 2006 from 77,000 compared to 280,000 customers today. The growth indicates that the country has to imperatively increase investment in more electricity generation projects.

Some of the energy projects that are under construction include the Kivu Watt expected to generate 25MW from Methane gas by the end of this year and Nyabarongo hydro power with a capacity to generate 28MW by the beginning of 2014.

It is projected that EWSA, the country's electricity and water distributor, will be making a cash balance of RWF 0 by 2014 while experiencing a loss of US$ 10 million per year.