Indian Company Unlocking Energy Potential Through Peat

The Independent (Kampala)

2 June 2011

Punj Lloyd, an Indian company, is expected to invest approximately $300 million to produce 100Mw from peat, a coal-like fossil fuel, which can be used as a source of energy for households and industries. Rwanda, according to local authorities, has huge deposits of peat mined in Rwabusoro.

Eng. Colette Ruhamya, Rwanda’s State Minister in charge of Energy and Water told The Independent that, “among the investors interested in investing in energy sector, we have learnt that Punj firm is a potential investor.”

Currently only the Rwanda Investment Group (RIG), in partnership with government, invests in peat producing 15Mw. Punj Lloyd’s investment is seen as especially valuable because it is expected to drastically bring down energy prices.

“We see it as a quick win, the contribution will be very high,” Ruhamya says. “If we get cheap power, prices are likely to go down.”

Rwanda’s high dependence on biomass (wood and charcoal) and hydro-electric power as a source of energy, positioned the country as one of the economies with the highest energy costs in Africa.

Rwanda’s electricity generation capacity increased by 45.3 per cent from 41Mw in 2004 to 75Mw in 2010 and load shedding going from approximately 50 per cent at peak hours in 2004 to zero per cent in 2010.

The figure of generation capacity will be expanded to at least 130MW by 2012 mainly through investment in hydropower and methane gas projects.

The sector had a boost from Rwanda’s Urgent Electricity Rehabilitation Project (UERP) through the International Development Association (IDA), which financed and technically supported the construction of Jabana Heavy Fuel Oil Power Plant, a new 21 megawatt (MW) power plant.

Punj Lloyd has already completed a technical feasibility study that has turned out to be viable and has also undertaken a resource availability study.

Negotiations are underway to see the company will extract peat from its deposits. “The remaining work is to get concession for peat and negotiate a power purchase agreement,” says Clare Akamanzi, Chief Operations Officer in Rwanda Development Board.

The company’s interests are believed to be a result of President Paul Kagame’s visit to India and subsequent visits by Prime Minister Bernard Makuza and other government officials to Thailand, India, China and Malaysia.

“Emerging economies are our new focus,” says Akamanzi. “[We are] changing from traditional markets and giving attention to India, Middle East, and China.”

Punj Lloyd recently said that they intend to position Rwanda at a competitive level through supporting the infrastructure.

“It is also going to require a lot of power and we are looking at power as the number one priority. After that we will follow with other investments,” Punj said.

The Indian firm is also interested in exploring many other sectors in Rwanda such as technology, training and human capital in order for Rwanda to enjoy high skilled human resources for secondary and tertiary care. Punj Lloyd is also hoping to invest in healthcare–to develop Rwanda into a high end health hub in East Africa–real estate, vocational training and even agro-processing of passion fruits, avocado and other horticulture for both domestic consumption and exports.

Punj Lloyd is expected to submit the final feasibility studies by the end of this May 2011, a move that will determine how much concession needed.

ArunYadav, Indian Minister of State for Agriculture and Food Processing Industries said the focus would be the development of food processing units in Rwanda.

AllAfrica – All the Time