Presentation of 4 Rural Electrification Plans: Kenya, Tanzania, Malawi, Rwanda 24 th March 2010

1. Presentation of 4 Rural Electrification Plans: Kenya, Tanzania, Malawi, Rwanda 24th March 2010

2. Contents of the presentation Presentation of 4 RE Plans: Project area Targets of RE plan Costing Financial Analysis

3. KENYA: RE PLAN

4. Main features of the project area Area split between sugarcane and tea growing Scattered housing, but a few interesting small trade/village centres Coverage of KPLC grid is already good, except in the most remote villages on top and at the bottom of the ridge EPK has its own grid network connecting the existing hydro site to Savani factory, and will be expanded to connect Chemomi, Kibwari and Sitoi

5. Main assumptions A distribution company would be connected to hydro supply through the EPK power lines connected to Kipchoria SHP, purchasing power at bulk tariff Targets of the distribution company would be trade centers located close to the forecasted EPK network Currently very few households in these centers, but it is expected that more will come after electrification Part of the power needed for rural electrification would come from hydro, and part from the KPLC grid (two-way interconnection) Some estate workers camps will be electrified by EPK as a separate project mostly for domestic lighting purposes

6. RE candidates Potential customers 175 households ~1000 households living <1 km of targeted centres 8 primary schools, 2 secondary school, 1 polytechnic school, 3 dispensaries and 7 churches 233 commercial activities 193 customers in year 1, 522 in year 20 587 households connected in workers camps

7. Sources of electricity for RE 1st year 20th year

8. Use of hydropower: RE remains small % of total power supply 1st year 20th year

9. Costing Investment costs (meters, transformers, lines) for distribution company for RE project: Year 1: 378,100 USD Over the period (20 years): 115,300 USD Investment costs for workers camps Year 1: 233,200 USD No significant investment over 20 years Investment to connect remaining identified load centres from the KPLC grid via plain grid extension : 533 000 USD

10. Financial analysis of the RE project- Assumptions Distribution company would purchase power at 6.3 KSH/kWh, which is a weighted average of Hydro feed-in tariff: 6.2 KSH/kWh Grid industrial tariff: 7.5 KSH /kWh Share of hydro in the mix has moderate impact 30% equity, the rest is borrowed at low rate (8% - over 15 years)

11. Financial Analysis - Results Main figures Equity first year: 130,400 USD Retail tariff to reach 8% IRR (REA criterion): 19.12 KSH/kWh (25.62 UScts/kWh) Payback time: 16 years Retail Tariff would be higher than current average KPLC tariff (9 KSH/kWh) However, fuel charges are sometimes added to KPLC tariffs, raising tariff up to 15 KSH/kWh

12. Possible solutions for financial sustainability Grant on part or totality of investments 79% grant on all investments to reach base KPLC tariff 23% only to reach KPLC tariff + 5 KSH/kWh fuel surcharge Lower power purchasing tariff 58% grant needed, if power purchase tariff is taken at production cost +20% (4.4 KSH/kWh) Revenue loss for EPK: 5,500 USD (year 1) to 19,200 USD (year 20) Treat RE project as part of the SHP project Investment costs increase by 6%

13. TANZANIA: RE PLAN

14. Main features of the project area Wide area (16x10km) covering Katumba and Mwakaleli tea factories Scattered housings in villages inland from the main road going from Katumba to Kendete Relatively denser villages along the main road TANESCO grid already covers the main towns/trade centers (e.g. Suma) on this road Very low connection rate in electrified areas

15. Map of the project area

16. Main assumptions A distribution company would be connected to hydro supply through the power line connected to Suma SHP, purchasing power at bulk tariff Targets of the distribution company would be villages located near the expected hydro power line Malamba (next to SHP) Itagata (under the line going to Katumba TF) Busona & Bunyakikosi centres (towards Suma village) Part of the power needed for rural electrification would come from hydro, and part from the TANESCO grid (two-way interconnection)

17. Map of RE candidates

18. List of potential customers, actual connections expected and energy mix Potential customers 296 households (442 in year 20) 4 primary schools, 1 secondary school and 1 dispensary, 4 churches 46 commercial activities 62 customers in year 1 to 182 in year 20 Sources of electricity (year 1 to year 20)

19. Use of hydropower: expansion plan of TF 1st year 20th year

20. Costing Investment costs (meters, transformers, lines) Year 178,800USD Over the period (20 years): 108,300 USD

21. Financial analysis - Assumptions Distribution company would purchase power at weighted average of Hydro feed-in tariff: 96TSH/kWh Grid industrial tariff: 105TSH/kWh (tax exc.) Share of hydro in the mix does not have real impact Result: 100 TSH/kWh, higher than average retail tariff of the project if TANESCO is the operator (96 TSH/kWh) 30% equity, the rest is borrowed at low rate (8%)

22. Financial Analysis - Results Main figures Equity first year: 58,000 USD Maximum equity injection: 122,000 USD (in year 7) Retail tariff to reach 5% IRR: 341TSH/kWh Payback time: 18 years Retail Tariff would be much higher than current TANESCO tariff, but in line with regulated tariff for IPPs on isolated grid (335 TSH/kWh)

23. Possible solutions for financial sustainability Grant on part or totality of investments 100% grant on all investments would lower tariff to 142 TSH/kWh only 500$/customer grant from REA => 34% Lower power purchasing tariff Assuming 100% grant on investments, a power purchase tariff of 65 TSH/kWh would be required to reach parity with the grid Revenue loss for WTC: 1,000 USD (year 1) to 7,000 (year 20) Treat RE project as part of the SHP project Investment costs increase by 4% Overall IRR decreases from 7.3% to 6.4%

24. MALAWI: RE PLAN

25. Presentation of project area • Wide area 10x10 km • High pop. densities between Mulanje Mountain, Tea Estate and main road • ESCOM network along tarmac road and up to Bloomfield TF • Villages far from grid & services

26. RWANDA: RE PLAN

27. Presentation of project area Wide area but focus is on surroundings of Nyabihu, Rubaya and SHP Utility network goes along the main road, with a few electrified villages on the way Relatively dense villages around Tea factories but not many close to the proposed SHP RMT asked to connect Jomba HC and Vunga

28. Overall Challenges : Rural electrification not a profitable business - social investment Convincing agro-industries of their CSR Identifying actors who can & want to be responsible for power distribution in rural areas: co-ops, entrepreneurs, agro-industry? Tariff setting for the end-user A neutral body that provides neutral advise and assists the negotiation between all parties : PPA with utility & with distribution company Capacity building both for generation & distribution Availability of grants & soft loans. Public-private partnership that facilitate co-financing of rural electrification schemes by rural electrification authorities

29. Thank you for your attention ! All plans on: www.paceaa.org