The Government of Rwanda and African Development Bank today signed a loan agreement worth US$ 269 million (approximately Frw 237 billion) to finance Power supply reliability in Rwanda.
The concessional loan will be disbursed under the second phase of Scale up Electricity Access Program (SEAPII), which is expected to improve reliability of electricity supply, increasing on-grid access for households and productive usages, and increase off-grid access to renewable energy.
Speaking after the signing, the Minister of Finance and Economic Planning Dr. Uzziel Ndagijimana noted that SEAP II will help Rwanda to achieve its National Strategy for Transformation (NST1) goal of providing sustainable, affordable and reliable electricity services, and achieve universal electricity access by 2024.
“This project will be a key milestone in improving reliability of electricity supply, which will positively impact our economic growth, promote our private-sector-led job creating growth, particularly for the youth, and reduce poverty,” Minister Ndagijimana said.
The SEAP II loan is aligned to the AfDB 10-year strategy (2013-2022) and current Country Strategy Paper for Rwanda. It also supports three of the Bank’s High 5 priorities namely Light up and power Africa, Industrialize Africa and Improve the Quality of life for the people of Africa. Following the signing of this facility.
“The Bank’s energy portfolio in Rwanda will increase from €158.95 million to €388.74 million, supporting eight operations, three of which are being implemented jointly with neighboring states”. The Bank’s Country Manager for Rwanda, Martha Phiri said.
The first SEAP project between Government of Rwandan and the African Development Bank was signed in 2013 was worth US$46 million (Approximately Frw 40.4 billion). The funds were used to upgrade two major distribution substations and constructed 1365 km of medium and low volt network for on-grid access to 30,636 households, 32 health centers, 210 schools and 52 sector administrative facilities in six districts. The project was implemented over a 6-year period. The effective cost of each additional connection is US$1,400.
By utilizing Rwanda Energy Group in-house skills, and local contractors, and use of country systems, the SEAP II through the Results Based Financing (RBF) instrument is expected to deliver among others, 193,366 on-grid connections within three years at an average cost of around US$900 per connection. This demonstrates the cost effectiveness of the RBF instrument and the reason it has become the instrument of choice for Government financing in various sectors including energy.
SEAP is a project within a wider multi-donor funded “Electricity Access Rollout Program (EARP)” stringing 14,450km of medium and low voltage distribution lines to increase the number of households connected to electricity in Rwanda from 330,000 in 2012 to 1.45 million in 2017, including providing electricity connection to 90% of the schools and 100% of administrative facilities in the country.
In terms of cooperation AfDB is active in the Energy sector, Private Sector, Transport, Agriculture, Water and Sanitation.