Rwanda turns a new leaf in its energy strategy with services from Fortum eNext
28 January 2019, 09:17 EET
In recent years, Rwanda has been one of the fastest growing economies in the East African Community, recognised by the World Economic Forum. It is also among the most stable countries in Central Africa. Along with growth comes the need for more energy, amongst other things.
Since 2017, Rwanda’s electricity demand has tripled, and the country suffers from the lack of energy. Only a quarter of its population has access to the power grid. In addition, more than half of total energy available in the country is currently generated using imported diesel fuel.
Fortum, with its world-class knowledge of the energy business, hopes to educate and foster energy knowledge also in Rwanda.
“We have signed a five-year agreement with Yumn Ltd in Rwanda. The agreement covers the operation and maintenance (O&M) services of a new 2 x 35 MWe peat-fired power plant, including the technical services and IT tools needed for the plant. In addition, Fortum is responsible for the mobilisation phase of the new power plant. The site is located in one of the most remote areas in Rwanda, near the Burundian border. This project requires our extensive know-how of peat-based technologies,” says Antti Malve, Area Director, Europe and Africa, Fortum eNext.
Playing an important role in Rwanda’s energy strategy
Fortum is committed to using modern technology to minimise emissions and other impacts of energy production on people and the environment, so the project in Rwanda fits the bill perfectly. The new peat-fired power plant is expected to increase the installed capacity in Rwanda by 40% and replace fossil fuel imports, thus bringing more energy independence to the country.
“Rwanda is currently heavily dependent on imported diesel fuel, which makes the existing electricity production very expensive as well as highly polluting. When you have to resort to importing energy, it costs a lot. Rwanda has limited natural resources to produce power on its own. Peat is Rwanda’s own large natural resource. This power plant will thus have an important role in the energy strategy of Rwanda. It will also have a positive economic impact on the local community and infrastructure,” comments Malve.
“Our goal is to bring energy expertise and to involve local people in the project. The employment effect locally is significant. We aim to cooperate with local technical colleges and universities, so that the country can be more self-sufficient in terms of know-how and resources in the future.”
A trusted operation and maintenance partner
Fortum has significant experience in the field of energy and the implementation of projects in different countries. The power plant project calls for Fortum eNext’s operational know-how and the ability to operate in a country where no corresponding power plant expertise exists.
“In Africa, the electricity market isn’t as advanced as it is in Scandinavia. Projects are often financed so that banks and lenders carry the risk of whether the project is successful or not. Thus the natural question is does the power plant work so well that the project is able to pay its loans and interests back. The bank has its say in who gets to build the plant and who operates it. Fortum is a trusted operator for power plants. We will also bring our offshore support to the project by involving our technology and expertise also outside of Rwanda as regularly as needed. We have top references, in addition to high customer satisfaction rates,” says Malve.
For Fortum, this new O&M agreement is the continuation of a long history of O&M service contracts. The company has been selling various expert services to power plant asset owners, energy companies and industrial facilities globally for decades, including to, e.g., Germany and South East Asia.
“Recent success cases include a ten-year O&M agreement with MGT Teesside Ltd for the biomass-fired combined heat and power plant in the UK. We have extensive experience in O&M services and O&M development involving the combustion of difficult fuels. We are happy to support this project that helps in Rwanda’s electrification with local fuel.”
According to Malve, Fortum eNext has had its eye on Africa for a while.
“We have been following Africa for some time, especially the East African Community. They are aiming at an EU-style commercial and administrative entity. Meanwhile, the construction phase of the plant has begun in Rwanda a year ago. For us, the focus is on mobilisation and recruitments of O&M staff. Fortum key personnel have been appointed to be located at site.”
The road ahead
When starting business operations in a new country, there are many factors to look at. Each country has its own common practices, requirements for doing business, as well as customs and cultural aspects. For Fortum, Rwanda is an exceptional African country.
“In Rwanda’s capital of Kigali, there are good services available. However, the plant is approximately a three-hour drive away and there are fewer services there. The establishment of a local service company was the foremost thing for us; once that was in place, permanent housing arrangements for the workers were built after summer. Visa and work permit practices, occupational health and general safety in the area have been properly prepared and everything looks good. Rwanda is very well managed, its infrastructure is new and maintained well, mobile network covers the whole country, and the literacy rate is close to 100%. The main roads are of high quality and clean, and traffic is organised.”
The first of its kind peat power plant project received the Africa Power Deal of the Year in the Infrastructure Journal Global Awards 2017.
“We are looking forward to working together with the local people. The road ahead looks very promising and we are happy to be a part of it,” concludes Malve.
Rwanda power plant
Fortum eNext providing operation and maintenance services.
Customer: Yumn Ltd in Rwanda, Africa. Main owners of Yumn Ltd: Hakan A.S (Turkey) and Quantum (Israel)
Capacity: Peat burning 2 x 35 MWe installed capacity (with option for a third 35 MWe unit)
Site: 4,200 hectares of peat land, enough for minimum 30 years of operation
Nordic companies know peat well; several Finnish and Swedish companies involved in the project:
- BMH providing peat harvesting and handling equipment
- Sweco, Owner’s Engineer and Technical EPC Advisor
- BHK Finland, peat conveyers
- Andritz Finland BFB boiler, Siemens steam turbine and balance of plant
- Soil and Peat Analyses and Lenders’ Engineer by Pöyry (2013)
- Finnfund providing partial funding, Finnvera export credit security