Rwanda, AfDB sign €229m loan agreement to finance electricity projects

The Government of Rwanda has signed a €229.20 million funding agreement with the African Development Bank to support the country’s program to improve electricity supply and expand access to electricity under the Scaling Up Electricity Access Program Phase II (SEAP II). This operation builds on the successful implementation of the Scaling Up Electricity Access Program (SEAP) approved by the Bank in 2013 with a combined estimated €39.74million loan and grant.

The operation involves a €165.59 million loan from African Development Bank and €63.61million from the African Development Fund, the concessional arm of the Bank group. The two loans represent 8.2 percent of the Government’s estimated €2.85 billion budget for the Energy Sector Strategy Plan. It is the biggest single operation of the Bank to enable the government achieve its National Strategy for Transformation that among other objectives seeks to ensure that by 2024 all Rwandan households, health centers, schools and business enterprises are connected to reliable electricity.

The Bank’s contribution to SEAP-II will be for the three fiscal years ending in 2021/22 and will be disbursed using the Results Based Financing (RBF) instrument, which ensures better risk management and the country’s highly developed results-driven approach.

The funding will support construction of 795 kms of Medium Voltage and 7,317 kms of Low Voltage lines, boosting nationwide connectivity and lighting up previously unserved communities. The program is expected to result in significant reductions of time and frequency of service interruption to customers and network losses and will ultimately contribute to ensuring financial sustainability of the country’s energy sector.

In the last seven years, overall access to electricity in Rwanda has more than doubled from 18 percent to 44 percent at the end of June 2018. The country has also shown strong commitment to achieving universal electricity access by 2024, using a combination of on-grid and off-grid solutions like solar home systems.

“The approved program will enable the Government to add over 193,000 new on-grid and over 124,000 off-grid connections,” said Amadou Hott the Bank’s Vice President for Power, Energy, Climate Change and Green Growth.

The Bank’s intervention will improve reliability of electricity supply, increase on-grid and off-grid access to renewable energy for households and commercial usage, and strengthen institutional capacity to deliver on the ambitious government energy program. Slightly over 4,000 people, 30 percent of them women, will receive technical, financial management and safety training. The Government of Rwanda welcomed the timeliness of the Bank’s support towards the county’s universal electricity access goal by 2024, and has committed to allocate the necessary resources for the successful implementation of the operation.

This support will be extended to the Energy Development Corporation Limited and Energy Utility Corporation Limited — subsidiaries of Rwanda Energy Group Limited, the government-owned utility which manages and operates the country’s energy infrastructure.

The SEAP II loan is aligned to the Bank’s 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 Country Manager for Rwanda, Martha Phiri said that “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”.