Rwanda to cut power prices by a third by 2012

By Hereward Holland

KIGALI (Reuters) - Rwanda aims to slash electricity tariffs by a third and double power generation through gas and hydropower projects by 2012, the central African nation's Energy Minister Alfred Butare said.

The land-locked country, whose power supply has begun to stabilize after five years of severe outages, will see the first 25 MW of a $325 million methane gas project connect to the grid by October next year, Butare told Reuters.

The Lake Kivu gas deal with ContourGlobal, a New York-based renewable power developer, will total 100 MW upon completion at the end of 2012 and is Rwanda's biggest foreign investment to date.

"In the near term, 2012, we might be at a situation of around $0.15 per kWh as a retail tariff, which will be very good compared to where we are at the moment," Butare said on Sunday.

"Electricity is one of the major factors, amongst others, that facilitate a good investment environment."

Most of Rwanda's 69 MW power output is currently produced by hydropower and heavy oil thermal generators.

Rwanda has signed an agreement with Industrial Development Group (IDG), a South African investment company, to study the feasibility of building a gas-to-liquid plant on Lake Kivu, which borders the Democratic Republic of Congo, Butare said.

The IDG plant will convert methane gas into petroleum products like diesel, petrol and liquid petroleum gas, he said.