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Ambitious targets charge energy sector with investment potential

Interview - August 3, 2016

A greater energy mix, better infrastructure and advanced skills development are among the benefits to be seen in Rwanda through increased regional integration, says Dr Ivan Twagirashema, Executive Director of Rwanda Investment Group (RIG). He adds the opportunities Rwanda presents to international investors are huge, particularly in the energy industry, as the private sector is being encouraged to drive the country’s growth and the government aims to hit its ambitious rural electrification targets.

 

DR IVAN TWAGIRASHEMA, EXECUTIVE DIRECTOR OF RWANDA INVESTMENT GROUP (RIG)
DR IVAN TWAGIRASHEMA | EXECUTIVE DIRECTOR OF RWANDA INVESTMENT GROUP (RIG)

Africa is becoming a growing investment destination for both advanced and emerging economies. What is driving this prominence the African continent is gaining in the international arena?

There are many reasons that explain the current interest that people have for the African continent: raw materials availability and attractive commodities. Given these two key factors, strategic investors may think about transforming these within the African countries, and exporting final products to international markets. Africa’s young population is now ready to face the issue of skills, which has been an obstacle for the development of many countries in the past. Both investors and local communities will benefit from this situation of Africa becoming a growing investment destination.

 

You just mentioned industrialization, but another key priority is regional interconnectivity to take advantage of it. What are Rwanda’s regional integration efforts?

Rwanda is a landlocked country, and we are in a better position to understand the benefits from regional integrations. To give an example, the free movement of workforces in East Africa has participated in the development of Rwanda in the last 10 years. As a consequence, the tourism sector benefits from integration, and various commercial activities and financial services have been growing thanks to the involvement of skills from our neighbors. Many sectors benefit from integration, as a proper regulation has been put in place in order to promote the free movement of workforces.

 

Major projects are being put in place in order to facilitate people and goods transportation, in particular with the Northern and Central Corridor projects. This will definitely boost the private sector…

The Northern and Central Corridor projects are very advantageous for Rwanda within the region as we are a landlocked country. These projects interconnect countries and help to create a global market where the countries will be able to share their natural resources (oil for the pipeline project and railway for other products) and be able to sell or buy electricity (power pools), etc. The railways will help international transportation within the region considerably, whereas before all goods use to be transported by road. By implementing these projects we are reducing risks, facilitating exchanges and transport, and helping every country to optimize its economy.

 

What is your assessment on Rwanda’s new upstream petroleum policy?

The policy goal is to create a conducive environment to accelerate petroleum exploration activities in Rwanda, with a view to moving towards the production stage. At the moment Rwanda does not produce or refine oil. The upstream sector focused mainly on imported refined products (diesel, kerosene, jet fuel, heavy fuel, etc.) and the storage. Those products are then handed over to retail networks, such as petrol stations or to larger consumers such as mining plants, the agricultural sector and so on. The policy document also highlights the regulatory (policy, fiscal and legal) framework for the management of the upstream petroleum operations.

 

The KivuWatt project was all over the news recently, being a pioneer project worldwide, but Lake Kivu has a much bigger potential estimated at 700MW. What are the opportunities the lake offers?

Using methane gas for power production in Lake Kivu is one usage among many others. Through petro-chemistry transformation it will be possible to put in place an industry that does not exist in any other neighboring country; it can be used to produce liquid fuel or fertilizers for instance. Methane can also naturally be used as it is for industries in need to produce heat, such as cement plants, breweries, and tea and coffee factories, as they are currently using imported heavy fuel oil, charcoal and wood. Later on we could bring this commodity for household usage. Electricity production is nice; but the use of gas as a combustible is great for future industries that may want to come into the country. KivuWatt is now producing 25MW, and many investors are expected to come to make the most out of what methane gas is capable of giving.

 

Rwanda Energy Company Ltd (REC), one of RIG subsidiaries is focused solely on developing and managing the group’s investment in this slow-renewable fuel, which for example had a great impact in CIMERWA’s plant. What is Rwanda’s peat potential and how are you encouraging investments in it?

Peat harvesting at an industrial level came from an idea to reduce the use of imported heavy full oil in CIMERWA cement factory. The project started in 2009 and till today is used for heat purposes in the process of producing clinker. Later on the idea of producing electricity out of peat came into act and the government implemented a 15MW peat power plant project, which has now started the commissioning tests and the results are promising. A Turkish company called Hakan is developing another 80MW peat power plant, which is now at the designing and funding stage. Peat will play a significant role in the future energy mix of Rwanda.

 

As Chairman of Energy Private Developers, what opportunities does the energetic sector of Rwanda offer to interested investors?

During the discussion we mainly talked about fossil fuel energies. These still have great potential, and we should not forget the various uses of methane that we talked about earlier. Now peat also offers incredible versatility in regards to its usage, as it represents a great source of organic fertilizer. But, being in the 21st-century, we shouldn’t forget renewable energies, and Rwanda is full of opportunities in that aspect.

There is a huge potential in rural electrification.  The target of Rwanda is to get from the current 25% coverage in housing electrification to 75% within the next two years. The most efficient way to electrify the greatest part of Rwanda, the rural and remote areas, is by using renewable energies such as solar panels, windmills or even hydroelectricity. Around five companies are already electrifying independent houses with solar panels. 

The objective to electrify 75% of Rwanda’s population within two years is ambitious and we are calling for investors, as there is a tremendous amount of potential to be transformed into reality.

“Mini and micro grid” is another solution for rural electrification in Rwanda. For the last 10 years, the government has encouraged its people to live in villages (imidugudu) instead of living on their own in remote and individual locations. Regrouping people into villages eases the effort of the government to develop infrastructure and services (IT, water, electricity, health care) but it represents also a good opportunity for investors to develop mini-grid projects.

Today, mobile technologies allow companies to implement safe payments, leading to win-win situations in which both consumers and investors take advantages of. Electrical systems are now connected to mobile networks facilitating the distribution and the payment of electricity within small communities. Rural electrification is definitely the next milestone.

 

As a member of Rwanda’s Private Sector Federation, how would you assess the government’s efforts in order to enhance the ease of doing business in the country?

Rwanda’s economic context is quite interesting. Indeed, an Energy Private Developer can get incentives on a new project without a lot of bureaucracy. In order to encourage business in the country, entrepreneurs benefit from five-year tax holidays from the day they start developing the project, and the new investment code provides for many facilities and different kinds of incentives. Strategic sectors are prioritized, and custom agents are trained not to tax the goods imported by companies benefitting from these tax holidays.

In the government’s Vision 2020 the private sector is viewed as the engine of growth, therefore Rwanda’s authorities are doing whatever is needed to make this objective possible.

 

How would you say your scientific background strengthened your business carrier as RIG’s Executive Director?

The education and training I received as an engineer and PhD holder, lead me to think quickly, find solutions, and be capable of training, mentoring and transferring skills. A company is made out of a team and without a properly trained staff it is impossible to achieve ambitious goals. Transferring skills is essential, as it gives you confidence, allowing you to deliver what customers are expecting, or even more.

 

Minister Nsengimana told us Rwanda wants to be an innovative, attractive country. As you were Managing Director of the Ngali Institute, a former Rwandan projects incubator and engineering company, how does Rwanda stand in order to attract and generate innovators?

The true advantage of the Ngali Institute was that it gathered many engineers from different fields of expertise on shared projects. The objective was to make new businesses happen:  from concept ideas and prototypes to viable companies. As we don’t have many natural resources, Rwanda has to position itself on services. Setting project incubators and engineering companies helps to attract and generate innovators locally. We will have to create a friendly environment for innovation in order to attract engineers, scientists and researchers from neighboring countries, and other ways of benefiting from regional integration on the skills side. 

COMPANY DATABASESee all Database >

FUJISASH CO.,LTD.

Manufacturing, Japan

ABLIC Inc.

Manufacturing, Japan

Atago Ltd.

Manufacturing, Japan

LEADER DATABASESee all Database >

TSUTOMU YOSHIDA

Representative Director and President
FUJISASH CO.,LTD.

Nobumasa Ishiai

President and CEO, ABLIC Inc. Senior Managing Executive Officer, MinebeaMitsumi Inc. (Parent Company of ABLIC)
ABLIC Inc.

HIROSHI KOYAMA

MANAGING DIRECTOR
JUJO CHEMICAL CO., LTD.

Yoshihiko Hirano

President & CEO
Hirano Steel Co.,Ltd.

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