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Project Brief

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
KivuWatt Ltd.
Project ID
7840
Fiscal year
2011
Status
Not Active
Guarantee holder
KivuWatt Holdings
Investor country
Mauritius
Host country
Rwanda
Environmental category
A
Sector
Power
Date SPG disclosed
April 26, 2010
Project Board date
March 31, 2011
Gross exposure
 $28.6 million
Project type
Non-SIP
Tenor
20 years
Strategic priority area
Complex Project
IDA
ESRS
KivuWatt Ltd. - Environmental and Social Review Summary

View Summary of Proposed Guarantee


On May 3, 2011, MIGA issued a guarantee of $28.6 million to KivuWatt Holdings of Mauritius for its equity investment in KivuWatt Ltd. in Rwanda. The coverage is for a period of up to 20 years against the risks of expropriation, transfer restriction, war and civil disturbance, and breach of contract.

The investment is for the construction and operation of a 25 megawatt power-generation facility using methane gas extracted from Lake Kivu (the Phase 1 Pilot Project). The entire project (Phase 1 and Phase 2) involves extraction and separation of methane gas from the bottom of Lake Kivu and up to 100 megawatts of power-generation capacity to be implemented in two phases. The Phase 1 Pilot Project will involve gas extraction using a floating barge located approximately 13 kilometers offshore from the city of Kibuye. The extracted gas will be further processed and pumped to the shore for use in a power plant via submerged floating pipeline. Power will be produced by methane powered reciprocating engine generator sets with combined capacity of 25 megawatts, net output. Based on successful implementation of Phase 1, Phase 2 will comprise three additional gas extraction barges and three more power production blocks with 75 megawatt capacity resulting in 100 megawatts of overall power generation.

The output will be sold to the Rwandan state-owned utility, Rwanda Electricity Corporation (RECO), formerly known as Electrogaz. Phase 1 output will be connected to the national grid via a new dedicated 11 kV transmission line installed by RECO.  Phase 2 will be connected to the existing 220 kV transmission system via two new transformers to be installed by RECO.

Over the last decade, Rwanda’s economy has nearly doubled in size, growing at an average rate of 7 percent per year. Nevertheless, the country’s electricity infrastructure (the generation, transmission, and distribution network) has failed to develop in pace with the broader economy. Rwanda’s total installed power generation capacity is 55 megawatts and only 6 percent of the population is serviced by the national power grid. To keep up with demand, expensive diesel power generators have been rented and brought online, raising the power tariff per kilowatt hour to twenty-one cents, one of the highest in Africa.

The project’s primary development impact will be the generation of additional electricity capacity produced at a significantly lower cost than alternatives currently in the local market. Tapping the considerable methane reserves stored in Lake Kivu will offer the small, highly populated, and land-locked country with a secure, domestic, cheap, and renewable source of power supply. The project is being developed in conjunction with a $400 million initiative (supported by Rwanda and international donors) to simultaneously expand and overhaul Rwanda’s power transmission and distribution network.

One of the main objectives of the World Bank’s Country Assistance Strategy for Rwanda for 2009-2012 is to improve access to and quality of key infrastructure services. The project is fully consistent with this objective and is also aligned with MIGA’s strategic priority of supporting investments into IDA-eligible (the world’s poorest) countries and investments in complex infrastructure projects.

 
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