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Energy Joint Budget Support Review

Energy Joint Budget Support Review. April 2008 Vincent Gatwabuyege SG, Ministry of Infrastructure. Contents. Sector overview Budget Execution 2007 Progress New and Future Developments Methane Gas Progress against ‘Critical Actions’ from September 2007. Sector overview.

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Energy Joint Budget Support Review

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  1. Energy Joint Budget Support Review April 2008 Vincent Gatwabuyege SG, Ministry of Infrastructure

  2. Contents • Sector overview • Budget Execution 2007 • Progress • New and Future Developments • Methane Gas • Progress against ‘Critical Actions’ from September 2007

  3. Sector overview

  4. Sector overview cont… ACCESS: 5 % WITH LESS THAN 1% IN RURAL AREA Tariff: USD22ct/kWh

  5. PART 1 Execution Rates 2007 Millions of RWF

  6. Recurrent Budget • Budget 12.37 Mn • Nearly 90% of RB was spent on fuel for diesel generators ( taxes on fuel, fuel expenditures for diesel generators and capacity charges for 5 MW rental power) • the remaining was spend on office furniture, salaries, capacity building, etc. Methane gas exploitation

  7. Development Budget Execution 2007 In millions of RWF In millions of RWF

  8. Development Budget Executionby sub programme In millions of RWF, Source CEPEX (with the exception of AEP)

  9. Key Budget Lines in development budget execution

  10. Execution by Development Budget breakdown

  11. Execution by Development Budget breakdown

  12. Execution of Development Budget breakdown

  13. Execution by Development Budget breakdownExternal financing

  14. PART 2 2007 Sector Performancea) Progress b) Critical Actions Millions of RWF

  15. Progress

  16. Progress

  17. New Developments • Market analysis for Oil Pipeline (USTDA), presented Nov 2007 • Hydro Power Atlas (BTC, Belgian Government, SHER), presented Nov 2007 • Demand Forecast, as part of Electricity Master Plan, presented Nov 2007 • Study of Geothermal Potential underway (BGR) • Public Expenditure Review underway • Biomass strategy underway • Electricity and gas laws presented to the Cabinet in December 2007

  18. Future Developments • Wind atlas planned • Policy and Strategy update planned • New solar schemes under development • 84 health centers to be electrified by BTC • 34 health centers to be electrified by USAID • 37 health centers to be electrified by Global Fund • 13 health centers to be electrified by ICAP/Columbia • 100 health centers s, 100 schools and 150 sector offices to be electrified by EC • New micro hydro schemes under development • 3 MW micro-hydro plants under PPP with EC being planned • 4 new plants (5 MW) by Belgium Govt • US $ 4.5 GEF funding negotiation completed • Pilot Project for 2000m2 Solar Water Heating in hotels, hospitals and residential

  19. Lake Kivu Projects • Pilot project(4.5 MW): to be operational by June 2008, there was a delay due to technical problems • Contour Global (100 MW): Final negotiations for Gas Concession and Power Purchase Agreement underway • RIG-IPS-GoR Consortium (100 MW): IPS and other parties are looking to finalize the Shareholding Agreement by the end of April. Financial closure expected before the end of 2008 • W+S Beteiligungs GMB (50 MW): Deadline for final Gas Concession and Power Purchase Agreements set for 30th May 2008 • Gas to Liquid fuel project: Invitation letters have been sent to 8 companies that have expressed interest. Evaluation of bids planned for 30th April 2008

  20. Critical Action 1 • Share financial analysis of Nyabarongo project loan • Loan for project signed with Export & Import Bank, India • $80 million, 37% grant element, 5 year grace period, 20 year payment period,1.75% interest rate, approved in October 2008 • Additional $17.7 million is required • Levelized tariff is estimated at USD 8.5ct/kWh • Currently EPC contract negotiations are ongoing with 2 Indian contractors: BHEL and Angelique International Ltd. • Supervisor to be recruited soon • ESIA is ongoing • 27.5MW expected to come online in 2011

  21. Critical Action 2 • Progress report on the two laws and master plan in 2008 • Gas and Electricity Laws finalized and submitted to Cabinet and approved. • Await for parliament adoption in 2008 • Master Plan under progress, expected 2009. • Demand Forecast (part of the Master Plan) presented in November 2007

  22. Critical Action 3 • Define decentralization framework for earmarked transfers to districts to finance rural programs • Ongoing – More elaborated later in paragraph on Decentralization

  23. Critical Action 4 • Clarify the criteria for investment choices (develop a strategy based on detailed investment appraisal rules especially for large infrastructure projects in energy)

  24. Criteria's used by Infrastructure sector in line with National Investment Guidelines • Reference documents • Vision 2020 • National Investment Strategy 2002 – Minecofin/CEPEX • Long Term Investment Framework 2006-2020 • Concept Note for Public Investment Policy • EDPRS document • MTEF, etc

  25. Criteria's used by Infrastructure sector in line with National Investment Guidelines (cntnd) • Key guidance principles • Selectivity • Promote Private and Public Private Partnership (PPP) • Decentralization • Program Approach / SWAP • Macro economic equilibrium • Clarity (distinction /identify recurrent costs and investment components)

  26. PART 3 : Including +EDPRS CONTENT AND POLICY MATRIX + DECENTRALIZATION+ M&E FRAMEWORK

  27. Strategic outcome indicators in Policy Matrix

  28. Strategic actions in 2008 Policy Matrix

  29. Decentralization • MININFRA STRATEGY BASED ON THREE PRINCIPLES : • Focus is on Financial decentralization and not on administrative decentralization • Take in account lack of capacity at District level by building on progressive capacity improvement before transfering full responsabilities in order also to minimize technical and financial risks • Progressive process based on 2008 experience

  30. EFFECTIVE PROCESS FOR 2008 Decentralization Flow The way forward Budget sharing RMF Approval Reporting on Disbursement use MINECOFIN MININFRA Earmarked budget transfer Regular Reporting And about previous disbursement Reporting for previous disbursement S/SECTORS+UPPRC AGENCIES ? Technical assistance to Local Gvt. LOCAL GVT/CDP + IMIHIGO M&E MECHANISM

  31. ENERGY-EXAMPLE OF INTEGRATION OF DISTRICT AND SECTOR PLAN FOR 2008-2012

  32. 2008 FINACIAL DECENTRALIZED AMOUNTS (RwF) • Energy: Minecofin has planned to disburse 562 Millions RwF in 2008 for decentralized program (Digesters in 5 Districts and improved stoves) • Trainings (2) have been done for integration of Infratsructure Districts and Central Plans and to enhance M&E including reporting formats to be used

  33. Other perspectives for 2008 • Electrogaz is to get technical assistance from STEG to increase access to electricity • Grid extension Roll out Program to be coarried out in 2008 • Target for Roll Out Program: 16% by 2012 • Readness assessment will soon be carried out

  34. Further Initiatives for Roll Out Program • Electricity Prospectus, as part of the Sector Wide Approach (SWAp) • The final Roll out Program to be more aggressive than the current momentum – to target 350,000 connections • Planning with a computerized model (Earth Institute, Columbia University, New York) • Taking into account geographical, economic, industrial and demographic realities • A document (Prospectus) including the final costed Roll Out Program will be used to solicit funds from donors and private sector as part of the SWAp

  35. Development Partners contribution

  36. Roadmap for SWAp and Prospectus

  37. PART 4: Concluding

  38. There is progress in execution rates compared to last years • The remarked excess in the execution( above 100%) is due to commitment through LC openings • Due to increase in water levels in lakes fueling Ntaruka and Mukungwa HPP, a part of fuel charges will be saved (5 MW shut down temporarily): saving of USD 900,000 to 1 Mn per month. • Due crises in Kenya, transport costs have gone high but that did not affect energy as fuel supply agreement does not allow escalation in transport cost.

  39. Thank You

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