8 August 2014

Rwanda: Can EWSA Split Guarantee Efficiency?

While the recent split of the Energy, Water and Sanitation Agency (EWSA) was purportedly carried out to improve efficiency, the question remains whether this will be achieved given continued severe criticism about incompetence and mismanagement of resources, as well as poor service delivery.

EWSA was replaced by the Rwanda Energy Group, which comprises Energy Development Company Ltd and Energy Utility Company Ltd that were created to manage energy production and energy maintenance respectively, as well as the Water and Sanitation Corporation Ltd created to independently manage water resources.

Recently, members of the parliamentary Public Accounts Committee (PAC) released a report citing gross inefficiencies in the body most of which had also been highlighted in the 2012/2013 Auditor General's report.

Also in the latter report tabled before Parliament in May this year, auditor general Obadiah Biraro gave the national utility a 'disclaimer opinion' because of the gross errors discovered during the auditing exercise.

But it wasn't only the bookkeeping that was lacking - regular power and water cuts over the past years have left many wondering whether the ambitious goals for 2017 can be reached - which are 100% access to water (currently 74%) and 70% access to electricity (17% today). This would require investments worth about $3 billion (Frw 2 trillion).

However, new Infrastructure Minister James Musoni said the split is exactly geared to ensure efficiency in line with the government's vision.

"The companies will work as private companies so as to improve services. We also want these reforms to help us achieve our targets especially in the energy sector," Musoni said, adding that the money and skills needed to fund the country's water and energy projects will be provided by the companies.

Former employees of EWSA have been put on probation for a year in the new entities. The employees who impress will be retained while the others will be dismissed with compensation.

Many people are watching the new split keenly hoping for improved services. Robert Mugisha, a banker who has been a profound critic of former EWSA, thinks there is reason to be optimistic.

"The split will lead to better service delivery because this was a big entity which was in charge of crucial public resources and the managers became overwhelmed," Mugisha says.

James Sano, the Managing Director of the Water and Sanitation Corporation, agrees with notion that the split will ease the workload thus leading to better efficiency.


Rwanda Energy Group (CEO: Jean Bosco Mugiraneza)

A holding company comprised of:

Energy Development Company Ltd (managing director: Robert Nyamvumba): focuses on developing new energy generation and network expansion projects to meet set targets

Energy Utility Company Ltd (managing director: Odette Mbabazi): focus on operations (supply & distribution of electricity), gain a high level of efficiency

Water and Sanitation Corporation Ltd (managing director James Sano)

The companies are 100% State-owned but will operate on corporate principles to implement the government's policy and strategic plan for the energy and water sectors.

The rationale for EWSA reform:

Need to improve service delivery in the energy and water sector

Expand the service coverage through accelerated investments

Enhance operational efficiency i.e. Reduce water and energy losses, increase speed of new connections, billing and collection efficiency

Grant corporate status thus allow quick decisions but demand effective performance from the companies (blend private and public sector resources )

Target service to key productive sectors of the economy

Target subsidies to low income households

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