The World Bank Group and the Government of Rwanda have signed a $125 million Financing Agreement for the First Programmatic Energy Sector Development Policy operation.
is a concessional loan designed to boost companies in involved in the energy generation sector under the 2017-2024 national strategy for transformation. Rwanda expects up to US$325 million in three tranches from the World Bank.
The deal follows a September decision by the Government of Rwanda to increase financing to several projects in the energy projects. The government's objective is to lift electricity generation capacity from the current generation capacity of 208MW to 563MW and connect 70% of Rwanda's households to the grid.
At a generation of 563MW Rwanda hopes to have achieved universal affordable access to electricity in the short to medium term.
According to Germene Kamayirese, State Minister for Infrastructure responsible for Energy, Water and Sanitation, about 41% of households in Rwanda are connected to the power grid but the remaining 59% must also be connected.
Claver Gatete, the Minister of Finance and Economic Planning, and Yasser El-Gammal, the World Bank Country Manager, signed on behalf of their respective institutions.
This is the first credit in a programmatic series of three Development Policy Operations (DPOs) that lays out a consistent and incremental road map to enable fiscally sustainable expansion of electricity services in Rwanda.
The series supports the Government's Program to balance two-pronged objectives of containing fiscal impact of the electricity sector and improving the operational efficiency, affordability, and accountability of electricity service. Ultimately, implementation of the Program will ensure Rwanda's transition to a cleaner energy mix.
"The Program supported by the DPO series is based on a clear set of reforms that will help Rwanda lay the groundwork for successful energy sector development during the implementation of the National Strategy for Transformation for the period 2017-2024," said Minister Gatete.
This operation incorporates lessons learned from the World Bank's past and current engagement in the energy sector in Rwanda.
Most notably, DPO series draws on lessons from the Rwanda Electricity Access Scale-up and Sector Wide Approach Development Project (EASSDP) and Rwanda Electricity Sector Strengthening Project (RESSP), which are under implementation.
"The World Bank is happy to be a strategic partner of the Government in the energy sector. Through several operations, the World Bank has supported the Government with expanding access and generation capacity, restructuring Rwanda's electric utility and improving its efficiency. The proposed programmatic operation supports the Government in taking many of reform measures, initiated in previous World Bank operations, forward in a structured, pragmatic, yet transformative manner," said Yasser El-Gammal.
"The Program is designed to simultaneously address the three main challenges: lowering cost of electricity service delivery; boosting revenues from electricity service delivery; and enhancing affordability of low-income consumers. At the end of this series, Rwanda is expected to be on a clear path to gradually reduce Government transfers to the energy sector," said Yadviga Semikolenova, Senior Energy Economist and World Bank's Task Team Leader.
According to Germene Kamayirese, State Minister for Infrastructure responsible for Energy, Water and Sanitation, who was quoted by the press in Kigali, the deal is expected to lower the cost of electricity service delivery, boost revenues and ensure power is affordable for low-income consumers.
Minister Gatete explained that the program help Rwanda lay the groundwork for successful energy sector development.
"We need electricity access for schools, ordinary people, companies, and industries," Gatete reportedly said.