AfDB approves loan for Rwanda’s first regional hydropower public-private partnership project

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The African Development Bank Group announced on 16 March a US$ 24 million loan to support Rwanda’s contribution to the development of the Multinational Ruzizi III Hydropower Project. The project is a joint initiative of the three Great Lakes Region countries – Burundi, Democratic Republic of Congo and Rwanda – and will increase electricity trading within the region and beyond.

Over reliance on fossil fuels for electricity generation have led to serious electricity supply problems and high electricity prices that have negatively impacted Rwanda’s socioeconomic development. The 147 megawatt Multinational Ruzizi III Hydropower Project entails the construction of a run-of-river dam on the Ruzizi River between the Democratic Republic of Congo and Rwanda downstream of Lake Kivu and the Ruzizi II Hydropower Dam.

The project package includes an 8.3-kilometer 220kV transmission line to the Kamanyola power dispatch center and associated power evacuating lines which are funded separately. The output will be equally shared among the three participating countries and increase Rwanda’s clean energy generation capacity by about 50 megawatts. Additional benefits of the project include the creation of permanent and temporary jobs and a reduction in greenhouse gas emissions.

This is the first regional energy project designed as a public-private partnership and is aimed at optimizing the hydropower potential of the Ruzizi cascade while taking advantage of private sector management efficiencies and skills. For its implementation, a private sector partner, acting in the capacity of investor/developer and major shareholder has been recruited and will be awarded a 25-year concession to operate the project on behalf of the partnership.

Negatu Makonnen, AfDB Resident Representative, encouraged the government of Rwanda to consider more joint infrastructure projects to enhance regional integration and emphasized that, “Sustainable regional infrastructure is necessary for strong regional integration and key to successfully tackling today’s most challenging climate change-related challenges. The Multinational Ruzizi III Hydropower Plant Project is central to AfDB’s strategic vision for the development of the African energy sector through the promotion of universal access to low-carbon and inclusive modern energy.”

AfDB’s active energy projects portfolio in Rwanda now exceeds US$ 180 million while the Bank’s overall portfolio in the country is US$ 600 million, 66% supporting infrastructure projects. The Bank’s overall contribution to the Multinational Ruzizi III HPP is US$ 190 million covering contributions for Burundi, Democratic Republic of Congo and Rwanda, and resources to be lent directly to the project company on commercial terms. Additional financing is expected from other development partners and the three governments to cover the overall US$ 625 million estimated project cost.