26 December 2012

East Africa: Rwanda to Benefit From Regional Electricity Power Pool

Rwanda is amongst the five East African Community member states that are expected to become beneficiaries of the Eastern Electricity Highway project which is expected to see these countries use Ethiopia's surplus electric power for their domestic use.

The other countries expected to be connected in the power pool are Kenya, Burundi, Tanzania, and Uganda, according to the weekly, Capital Ethiopia.

This was revealed during the recent signing of a US$243 million loan agreement between the Ethiopian government and the World Bank for the financing of a section of Eastern Electricity Highway project connecting Ethiopia's electrical grid with Kenya.

The project is also expected to enable electric power sharing between the two countries so as to reduce energy costs, promote sustainable and renewable power generation as well as pave the way for more dynamic regional cooperation between the Eastern Africa countries.

This comes as Rwanda last week announced an ambitious $4.7bn roadmap for energy production and accessibility over the next five years to generate over 1,000 megawatts of electricity. The country currently produces 110.8MW. There is possibility that the country may have to export any surplus power, according to the Prime Minister Pierre Damien Habumuremyi during his address to Parliament recently.

The WB said the new Ethiopian project marks the first phase of a regional east Africa power integration programme which is likely to cost US$1.3 billion when completed, eventually paving the way to benefit 212 million people living in the five countries with a combined Gross Domestic Product of US$107 billion.

Guang Zhe Chen, World Bank country director for Ethiopia disclosed that the bank and the Ethiopian government have reaffirmed the focus on the partnership as the major pillar for financing during the 2013-2016 period, which this project is part of.

This particular project has two components; the construction of a high voltage direct current transmission line between Ethiopia and Kenya and project management and capacity.

The project is also expected to connect the East African electrical grid, with the Southern Africa electrical grid, as well as the northern Africa electric grid.

The bank previously granted Kenya US$441 million.

The 500 Kilo volt Ethio-Kenya transmission line is expected to be about 1200 kms long and cost an extra US$200 million to reach US$1.5 billion when the cost for Kenyans to upgrade their power infrastructure to take in this new electrical power and be more efficient is included.

Mihret Debebe, CEO of Ethiopian Electric Power Corporation (EEPCo) said the Ethio-Kenya electric transmission line project's economic viability study has already been finished, as well as its technical and financial study.

He said the process of hiring a consultancy firm is being finalised and the construction tender is expected to come out probably in May or June 2013 with the first phase expected to accommodate 400 MW, and the second phase incorporating other regional countries, set to see Ethiopia's power supply reach at least 2000 MW.

"We expect power export to be a source of a substantial foreign exchange earner, with competitive power export prices," said Mihret, adding that the construction period is slated to be 36 months.

The second phase of power purchase agreement with other regional countries is expected to be done in the future with Tanzania reportedly having already requested power.

EEPCO said Kenya will be paid transmission charge or what is commonly known as willing charge agreement; meaning Ethiopia is going to have an independent power export negotiation with third countries.

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