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Rwanda Seeks $1 Billion Geothermal Energy Investment

Among African nations, foreign observers can only cheer on Rwanda’s progress as it recovers from Africa’s most brutal civil conflict after the Democratic Republic of Congo (DROC).

A vicious civil war erupted in 1990, led by the Tutsi Rwandan Patriotic front (RPF), which led in turn to a murderous genocidal 1994 conflict, in which Hutu extremists killed an estimated 500,000 to one million Tutsi and moderate Hutus before the RPF ended the killings with a military victory.

Now, time to recover, and one of the population’s pressing needs is reliable energy.

And there seems to be good news on the indigenous energy front.

The Rwandan population certainly needs it, as while Rwanda is one of East Africa's fastest growing economies, with an expansion rate of 7.5 percent in 2010, but increased growth is hampered by energy shortages.

According to Rwanda’s Ministry of Infrastructure Water and Energy, only 14 percent of the Rwandan population currently has access to electricity.

So, where to turn for power?

Energy imports?

No, indigenous geothermal energy.

Rwanda is astride the East African Rift Valley, one of the world's hottest spots for geothermal activity and experts estimate the geothermal potential of the East African Rift Valley, a geothermal hot-spot that spans 11 African countries, at more than 15,000 megawatts, but the valley’s massive potential has remained largely untapped except for incipient projects underway in Kenya and Ethiopia.

Rwanda’s region with most geothermal potential is the country’s Virunga volcanic zones in the north and hot springs in the western part of the nation.

For the past year officials in the capital Kigali have been elated over the country’s future geothermal energy prospects, with Rwanda’s Energy Ministry noting in a statement issued last March, "Rwanda is targeting 310 megawatts of production in the next seven years at an estimated cost of $935 million. The geothermal sources have been identified between Gisenyi and Karisimbi Volcano and Bugarama. It will cost in total $30.2 million for drilling three exploration wells and doing the site preparation, which will include availing infrastructure on site. Rwanda is also looking at developing hydropower, methane gas, solar, biogas, peat, with an ultimate goal to reach 1,000megawatts of production capacity by 2017"

Fast forward a year. The multi-million dollar question is, who will pay for this development?

Rwanda’s geothermal potential has now attracted outside interest, including Japan, according to Rwandan state minister in charge of water and energy in the Ministry of Infrastructure Emma Francoise Isumbingabo, who told reporters that five Japanese experts in geothermal energy generation are currently in Rwanda to share knowledge with their Rwandan counterparts. Last December Japan’s International Cooperation Agency (JICA) pledged to support Rwanda’s efforts to obtain geothermal energy.

The scale of the problem?

Isumbingabo noted that Rwanda in 2009 had an installed capacity of only 69 megawatts, but plans to increase to the national electrical generating capacity to 130 megawatts by the end of 2012. According to Rwanda’s national electricity master plan, geothermal energy is expected to contribute at least 300 megawatts to the national grid by 2017, and potentially provide half of the country’s energy requirements by 2020

But, once again, as so often in Africa, Chinese companies seem to have the inside edge, as Rwandan Energy Water and Sanitation Agency (EWSA) consultant Stephen Alumas noted that while the country will ultimately invest about $1 billion in geothermal energy development, "We have already signed a contract with a Chinese firm, China Petroleum Technology and Development Corporation (CPTDC) to supply drilling materials to the tune of $7 million. We are currently carrying out a data interpretation exercise that will give us a final report on this project."

Ironically, the Chinese investment comes following scientific studies in Rwanda’s potential geothermal areas carried out by New Zealand company Ackland Uniservices Ltd.
However, don’t count the Europeans out either. Last November, according to Belgian Development Agency co-manager Erik Van Malderen,  his organization intends to spend $74 million) by 2014 to explore Rwanda’s geothermal energy potential , with the Brussels-based agency hoping to attract investors to the East African country by conducting drilling to prove that about 300 megawatts of energy can be extracted from Rwanda’s part of the East African Rift.  Malderen said in an interview, “They (invesotrs) are a little bit reluctant to invest until it has been proven that there is a resource” before adding that “But there is some interest” from companies.

For those 86 percent of Rwandans seeking their place in the 21st century, a light bulb is probably more important however than where the ultimate profits from their electrical bills show up.

By. John C.K. Daly of Oilprice.com

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