Rwanda to review electricity tariff amidst growing cost of production

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RWANDA’S Energy Development Corporation is proposing the review of current electricity tariff for both domestic and industrial users. The proposal, which is based on a better energy mix, reduction of thermal contribution to generation and negotiation of better feed in tariffs, seeks to lower tariff by as much as 50 percent for some customers.

Rwanda has reduced the use of heavy oil as fuel to power its plants, offering a better and cheaper energy mix. Heavy oil was used to power 50 percent of Rwanda’s power plant at the beginning of 2015 and currently stands at 37.8 percent as the government focuses attention on renewable sources and peat.

The reduction is also targeted at reducing high production costs among manufacturers. Industrial users currently pay $0.24/kWh in Rwanda and the new structure seeks to lower the tariff to $0.12/kWh, a 50 percent reduction.

There are several power projects currently ongoing in the country that are likely to result in further reduction when they come on stream. However, electricity still remains heavily subsidised in the country with the government spending an estimated $37 million annually on subsidies. Turkish company, Hakan is currently developing an 80MW plant powered by peat in the country, while the 80MW Rusumo hydroelectric plant is scheduled for completion in 2019.

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