Boosting Rwanda’s Energy Sector: AfDB, other Lenders Commit USD 91.25 million to Kivuwatt Project

Kigali, Rwanda - 24 August 2011 - The African Development Bank and other lenders have committed USD91.25 million to the development of the Kivuwatt power project in Rwanda, under a loan agreement signed with ContourGlobal, a project developer, on Wednesday, 24 August 2011 in Kigali. The project’s total cost is USD 142.2 million. Development Finance Institutions will contribute USD 91 million, of which the AfDB will provide USD 25 million.

The Kivuwatt project is sponsored by ContourGlobal a New York based international power company with 3250 MW in operations or under construction in 20 countries.  The private company was founded in late 2005 by Chief Executive Officer Joseph Brandt and Reservoir Capital Group, a $5 billion USD investment fund based in New York. With over 1500 people on four continents, ContourGlobal develops and operates electric power generation facilities powered by natural gas, hydro, wind, solar, biomass, coal and fuel oil.

The AfDB financing targets Phase 1 of the KivuWatt project - an integrated-methane gas extraction and power production facility. Phase 1 involves gas extraction using a floating barge located approximately 12.5 km offshore from the city of Kibuye.  The extracted gas will be further processed and pumped ashore for use in a power plant via a submerged floating pipeline. Power will be produced by methane-powered reciprocating engine generator sets with a combined capacity of 25 MW, net output.

The project’s 25MW contribution in Phase I will increase Rwanda’s installed power capacity by 40 percent. The project is expected to displace expensive electricity. In addition, gas extraction from Lake Kivu is necessary to reduce the risk of eruption, and avoid major loss of life around the lake. Instead of simply venting the gas into the atmosphere, the project avoids releasing polluting methane and captures the development benefits through power generation.

Speaking at the ceremony, AfDB Resident Representative in Rwanda, Negatu Makonnen, stated that the Bank was proud to be involved in the project. “The Kivuwatt project will provide affordable power supply with improved reliability that will increase electricity access to both rural households and businesses in Rwanda,” Mr. Makonnen emphasized.

Rwanda’s domestic power supply currently comes from hydropower, limited solar energy, and costly small diesel-fired engines. Rwanda has a very low electrification rate (currently 9%), with only 68.4 MW of installed capacity. The installed power capacity is currently insufficient to meet peak demands, forcing the reliance on expensive diesel fuel generators and electricity imports from the Democratic Republic of Congo.

The project is in line with Rwanda’s Economic Development and Poverty Reduction Strategy, which is designed to reduce electricity production costs and diversify the country’s electricity generation, focusing on indigenous resources, including Lake Kivu methane gas, hydro, and geothermal.