Electrogaz

cancelled

The government of Rwanda awarded a five year management contract to run the energy and water parastatal Electrogaz to a German consortium formed by Lahmeyer International Gmbh (LI) and Hamburger Wasserwerke in June 2003. The contract was granted through an international competitive tender process in which six major international consortia pre-qualified to submit bids, but only two (LI and South Africa’s Eskom Enterprises) submitted the final bids. Electrogaz had an installed capacity of 30 MW which was largely based on hydropower from Mukungwa (12 MW) and Ntaruka (11.3 MW) hydro-electric dams. The water production capacity of the company was 15 million cubic meters. Electrogaz served some 25,000 combined customers for power and water services. Created in 1976, Electrogaz was responsible for the production, transport, marketing and distribution of electricity, water and gas. Technical losses amounted to 33% for electricity and 50% for water. Apart from the technical losses, commercial losses of the company reached 60% for water and electricity combined. Due to this lack of efficiency in ensuring payments, Electrogaz had large outstanding accounts payable owed by its clients amounting to nearly Frw 17.5 billion (US$40.7 million) by the end of 1999. The government of Rwanda developed a two step privatization strategy. In the short term, an initial performance based management contract was to be set up. Then, after the establishment of financial and operational stability, a long term concession or lease arrangement was to follow. According to management contract, LI was to carry out in depth analysis of the utility and then develop reliable forecasts for energy and water. Loss reduction programs were to be implemented, facilities rehabilitated and the power and water systems expanded. These improvements were to be funded in part through a US$25 million World Bank (IDA) credit and US$6 million from the Nordic Development Fund as part of the Urgent Electricity Rehabilitation Project approved in 2004. The program aimed to finance construction of a 10MW power station and rehabilitation of a hydro power dam able to produce 2 MW. The money was also to be used to rehabilitate the grid of Electrogaz and the lines that enabled it to import power from Congo-K's Societe Nationale d'Electricite and the Societe Internationale d'Electricite des Pays des Grands Lacs (Sinelac). By early 2005, Electrogaz served 67,000 customers, a signficant increase from 2003, but still only about 6% of Rwandan households had access to electricity, the majority of them in urban areas. On the 31st of March, 2006, an agreement was reached between Lahmayer International and the Government of Rwanda for a friendly termination of the management contract. Operational control reverted to the Government of Rwanda.