The African Development Bank has approved a $266m loan to Rwanda for its program to improve reliability of power supply and to expand access to electricity as part of a drive to transform the country into an export-oriented economy.
Image: African bank approves $266m loan to Rwanda for electricity expansion project. Photo: courtesy of Fré Sonneveld on Unsplash.
The loan provided by the African Development Bank will be specifically used for the Scaling Up Electricity Access Program (SEAP II) in Rwanda. The Eastern African country received bank investment of $46m in 2013 for the first phase of the program, using investment-lending financing, which is now 90% complete and ahead of schedule.
The approved facility comprises a $192m African Development Bank loan and a credit of $74m from the African Development Fund.
The combined amount constitutes 8.2% of the Government of Rwanda’s $3.3bn budget for the Energy Sector Strategy Plan.
The bank’s contribution to SEAP-II will be for the three fiscal years ending in 2021-22. It will be disbursed using the Results Based Financing (RBF) model to ensure better risk management and a results-driven approach aligned with the bank’s activities.
The funding from the bank will be used for the construction of 795km of medium voltage and 7,317km of low voltage lines, boosting nationwide connectivity and catering to previously unserved communities.
The program is expected to cut down time and frequency of service interruption to customers and network losses and contribute to ensuring financial sustainability of the sector.
Access to electricity in Rwanda has more than doubled during the last seven years, increasing from 18% to 44% as at end of June 2018. The country aims to achieve universal electricity access by 2024 using a combination of on-grid and off-grid solutions such as solar home systems.
African Development Bank vice president for power, energy, climate change and green growth Amadou Hott said: “The approved program will support the government to add over 193,000 new on-grid and over 124,000 off-grid connections.”
The bank’s assistance is expected to improve reliability of electricity supply, increase on-grid and off-grid access to renewable energy, and strengthen institutional capacity to deliver on the energy program.