16 January 2013

Rwanda: Nyamagabe Power Project Delayed

The construction of Rukarara II hydropower plant in Nyamagabe district has been halted, leaving bitter taste in the mouths of government officials.

According to sources, the German company contracted to build the plant decided to stop the construction early this month.

The company is seeking an additional $4.7m (Rwf2.9b) owing to 'extra-works' it carried out at the site, the company says.

The plant, under construction in Uwinkingi Sector, was due to cost $12.5m (Rwf7.9b). But the government says the company is asking for too much.

During his tour of Nyamagabe district last week, Prime Minister Pierre Damien Habumuremyi expressed frustration and disappointment over the halting.

He said the decision to stop the construction process was regrettable and asked the company to resume work as negotiations into the issue continue.

The Premier instructed the ministries of Infrastructure and Finance as well as the Energy, Water and Sanitation Authority (EWSA) to ensure the problem is solved before the end of January.

Premier Habumuremyi urged both parties to ensure the plant is operational by March this year. He had last visited the site in May last year. On that occasion, he expressed satisfaction with the progress. But last week, seven months after his first visit, he was disappointed by the turn of events.

'Extra works'

The Rukarara II project, which was first expected to be operational by November last year, is expected to generate 2MW of electricity upon completion.

Yussuf Uwamahoro, the EWSA deputy director-general in-charge of Energy, who was part of the delegation that accompanied the Prime Minister, labelled the amount the company is claiming as 'unreasonable' compared to the additional work.

"We know the company did extra work, but the amount they are requesting for is outrageous," Uwamahoro said.

The firm is said to have constructed a new road, which was not part of the initial plan. A field officer at the firm said they have blasted about 34,000 cubic metres of rocks, while they expected just half that "as stipulated in the contract." The source said the firm also excavated thrice the amount of soil indicated in the contract.

"We worked in very difficult conditions," the source, who spoke on condition of anonymity because he is not allowed to speak on behalf of the company, said. "We did more work than we were contracted to do."

By press time, efforts to talk to the company manager were futile as he is said to be out of the country. Sources say a highly-placed official, who was only identified as Marcus, is due to fly in for negotiations.

Officials at the firm say they are ready to negotiate to allow the works to resume.

Uwamahoro also said government is willing to negotiate the additional amount for the extra-works done. Though he did not rule out termination of contract in case negotiations fail, he said, "it is the last option but we hope we shall not reach that level."

"In the interest of time, it is important that the company completes the work it started because terminating the contract at this stage would mean that we take another time to negotiate with other firms and commission another study to ascertain the remaining works and its value. That would cost us time and additional money," he said.

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