Burundi: The Electricity Sector In Burundi: A Place For Renewable Energy In The Great Lakes Region?

Last Updated: 8 January 2018
Article by Julien Barba

The energy sector in Burundi is today very circumscribed. It is mainly made up of the national utility "Regideso", who benefits from a legal monopoly for electricity transmission, distribution and supply, renewed in 2015 for 25 years1. The generation capacities are owned and operated by Regideso, are mainly hydro-electric and are very old and subject to chronic sub-investments, as is the case for the transmission and distribution assets too. Most of the electrical equipment date from before the Independence in 1962, and any additional generation capacity may harm and cause outages due to the said obsolescence of the grid. Additionally, the country is frequently struggling - due to currency issues - to import oil in sufficient quantities for gas-fired plants and personal generators, as has been regularly observed for the last decade.

However, Burundi has (i) a growing power supply-demand gap due notably to a rapidly increasing power demand in the Bujumbura capital area, and (ii) a huge energy resource (notably renewable, with hydro, estimated to 1,7 GW, and solar, estimated to 2,000 kWh/m²/year). Burundi is also very densely populated compared to other neighbouring countries such as Tanzania or Kenya (350 people/km² and 10 millions of inhabitants, similar to Rwanda) and (iii) is largely subject to the funding and the structural reforms from World Bank and AfDB. It has a huge demand for small and medium scale energy projects which may match in particular with their agricultural needs (mechanization and food-conservation), the global welfare of the local population (schools and hospitals) and the potential mineral extraction in the region.

Putting aside the political crisis triggered in 2015, and considering the current difficulties of the country for importing energy resources and the needs in terms of agriculture, welfare and peace, the country would be ideally placed for developing numerous renewable energy projects. These projects should be implemented both at (i) a regional level, with multinational hydro-electric projects mutually benefiting to the countries of the Great Lakes region and with the progressive integration of Burundi in the Eastern African Community and at (ii) a national level, with small and medium-sized renewable energy projects feeding stammering industries, cities and townships. Interestingly, the Burundian Government has developed policies, with the help of World Bank and AfDB, to reform and modernize its electricity sector, as presented below.

1. A snapshot of the current energy sector in Burundi

Regideso, a publicly-owned company created in 1962 on the independence of the country, is operating the transmission and distribution grid and 8 hydropower (the 2 biggest being Mugere and Rwegura) and 2 thermal plants totalizing a very limited national installed capacity of 45 MW only for nearly 10 million people. There are very few IPP, providing electricity mainly for their own needs.

Aside from its national generation capacity, Regideso is buying electricity from an old cross-border hydropower complex located in DRC on the south shores of Kivu Lake, on the Ruzizi River, with 70 MW of power capacity to be shared between Rwanda, DRC and Burundi2. These generation capacities are nevertheless greatly hampered by the chronic under-investment in this sector, in particular in the obsolescence of the old hydropower plants and in the grid equipment (some HV transformers and substations dating from before the Burundi's independence in 1962), leading to an outstanding level of electricity loss of 24%. Due to periodic lack of currencies, the country is facing frequent oil shortages hampering the electricity generation of the small generator sets and thermal plants.

As an illustration of the severe obsolescence of the grid, the commissioning in September 2017 of an emergency leased power generation of 30MW for the supply of the capital Bujumbura caused severe outages due to the inability of the grid to remain stable for the wheeling of this new production.

On the consumption side, electricity shows very poor statistics: it only counts for 1.3% of the primary energy consumption (95% for biomass and 2.5% for oil), the electricity access rate is around 7% (42% in Kenya, 25% in Rwanda and 24% in Tanzania), and the average consumption is 25 kWh/month per person – which is slightly below the monthly subsistence level estimated to 30 kWh in Africa.

However, this negative global picture is counterbalanced by the implementation of several decisions and the development and construction of key projects at national and regional level:

2. New ongoing power capacity projects

(a) Regional power projects

From a regional standpoint, a new 200 MW hydro-electric project located in the Ruzizi River, in Democratic Republic of Congo, is currently in a developmental phase under the form of a 25-year BOOT to be signed between Electricity of the Great Lakes3, a public transnational entity, and the awarded consortium for the construction and operation of the plant, SITHE Global Power Ventures and Industrial Promotion Services Ltd. While the estimated project cost is around USD 600 million, several development finance institutions have already provided significant funding for the project (the European Union, the EIB, KfW, the AfDB and NEPAD-IPPF). It will be a run-off-the-river hydro-electric plant with three power units producing electricity to be evacuated by 220 kV lines to Burundi, Rwanda and DRC. EGL will sell one-third of the capacity to each national utility, on commercial terms, with a full payment security package, under separated power purchase agreements.

(b) National power projects

From a national standpoint, a 7.5 kWc solar PV plant project is currently under construction. This PV plant, located in the centre of the country (Gitega), is to be connected to the electricity grid operated by Regideso and is to provide a 15% increase in the generation capacity of the national grid. A PPA of 25 years has been signed between Gigawatt Global and the national utility, Regideso. This will be the first power plant built in Burundi in nearly 30 years and the largest private sector investment in Burundi in 2017

Aside from this solar PV project, a series of other generation projects are ongoing, mainly from renewable energy sources, and are listed in Annex 1.

(c) Emergency leased power generation

Additionally, and in view of the increase of the tariff electricity supply, the Burundian Government has - for 10 years - leased a gas-fired power generation of 30 MW located in Bujumbura, the capital city. This lease aims at bringing an immediate emergency electricity supply, but this solution will have both an environmental and financial cost: around 160.000 litres of fuel will be consumed each day and the Regideso will be required to pay around EUR 3,8 million per month. The lease has been entered into with Interpetrol, a company already operating in Burundi for the quasi-monopoly of oil importation.

(d) Transmission and distribution grids

In parallel, the transmission and distribution grid systems are benefitting from new construction works or rehabilitation works, mainly for the interconnection with the neighbouring countries, including notably the following projects:

  • a new 86 km transmission line is being constructed for the evacuation and transport of the electricity to be produced by the future Ruzizi III to Bujumbura, as part of the regional interconnection with the country of the great lakes region (AfDB, KfW and Burundi are financing);
  • a new 161 km transmission line is being constructed for the evacuation and transport of the electricity to be produced by the new hydro-electric power plant of Rusomo Falls (located in Tanzania), and financed by AfDB, EU and Burundi.
  • a new 143 km transmission line between Kigoma (Rwanda) and Gitega (Burundi) as a part of the regional interconnection with the Nile Basin Countries and financed by EU, KfW and Burundi.
  • and also a new 30 kV distribution line in Bujumbura (approved in January 2017).
  • The rehabilitation of the distribution grid of Bujumbura should also be tendered in the coming months by the Burundian's Government. All these rehabilitation works are funded by World Bank and the AfDB.

3. New electricity tariffs and prepayment devices development

In September 2017, concomitantly with the commissioning of the 30 oil-fired plants by Interpetrol, Regideso has decided to implement an increased tariff structure for the electricity supply: for a household, the first 50 kWh is priced 0.04 EUR/kWh, the second 50 kWh is priced 0.14 EUR/kWh and above 151 kWh, the kilowatt per hour is priced 0.26 EUR. For medium and high voltage consumers (industries and administration), the average price is 0.12 EUR/kWh excluding monthly charges (around 7.25 EUR/months). Asking the question of a cost-reflective pricing would not be very relevant in this situation since the actual costs incurred in Burundi by Regideso for electricity production are not market costs4.

In parallel, Regideso has since 2016 implemented the replacement of the existing post-paid metering device by pre-paid devices. In 2017, Regideso contracted with an Australian company, PAYWAY, which is the exclusive entity in charge of collecting and managing customer payments, enabling customers to pay for the electricity bills online or over the phone.

However, while the implementation of these programmes aim at enhancing profitability and efficiency of Regideso for the future, Regideso still suffers from important backlogs mainly coming from other government entities: the army and hospitals (estimated to EUR 28 million). Regideso is undergoing structural reform with the help of the World Bank and AfDB since 2008, which should lead – on the long-term - to the withdrawal of the State to the benefit of an independent manager through the conclusion of a concession contract.

4. A legal framework in place... yet to be enforced

A set of legislation has recently been passed by the Burundian Government. New laws on electricity5 and public-private partnership6 were passed in 2015, with the subsequent enactment of the application decrees. It is mainly French-law inspired, notably regarding the definition and use of the "electricity public service" and the use of "public service "concession" for hydro-electric projects.

It is noteworthy that there is no specific legal tool for renewable energy which would encourage renewable energy adoption or dis-encourage fossil fuels. However, this situation may change rapidly since the current regulatory tools are incomplete and far from being sufficient. An update or subsequent modification of this framework may be implemented in the near future.

From a legal standpoint, the 2015 Electricity Acts provides:

(a) On the production side, the current electricity law provides 4 regimes of electricity production:

1. Public-private partnership regime: this applies to any project implemented on the public domain of Burundi (e.g. public lands and fields owned by public entities, or rivers for hydro-electric plants). In this case, the operator must comply with both (i) the PPP law and (ii) the application decree enacted for the application of this regime. The PPP Contract can be entered into either by (i) the state, (ii) a parastatal entity or (iii) a local entity who will be in charge of the concerned public domain;

1. Concession regime: this applies only to hydro-electric production projects and transmission and distribution grid construction operation. A concession contract can only be executed by the State and by no other public entity. It covers design, financing, construction, operation of the hydro-electric plant and includes the marketing of the electricity produced.

3. Authorisation regime: this would be the common regime for power projects with an installed power capacity of or above 500 kW, and which would be located on private lands and not public lands. This authorisation is delivered by the Ministry in charge of Energy and must be obtained prior to the construction works.

4. Declaration regime: this regime applies for any power projects with an installed power capacity of less than 500 kW.

(b) Off-grid electricity production for auto-consumption is permitted under restricted conditions and covered by a specific section of the Electricity law. This configuration must be authorised by the Ministry in charge of Energy, and provides that the operator is authorised to produce, transport and supply electricity for an "exclusive use". The said authorisation is granted for a maximum of 25 years.

However, the direct selling to private third-parties (other than Regideso) by an Independent Power Producer is not, except in case of overriding reasons of general interest, to be permitted. Regideso remains the required buyer for buying any surplus electricity, and this for a duration of 25 years as from the entry into force of the Electricity law (theoretically until April 2040).

The Electricity law expressly provides that IPP will be authorised to sell directly to third-parties after the said period of 25 years, if no declaration of overriding motive of general interest by the Ministry in charge of Energy occurs.

In our view, there would be grounds today for triggering this declaration of emergency and authorising the direct selling of electricity to third-parties under the reason of overriding motive of general interest.

(c) On the distribution and transmission aspects, Regideso remains the exclusive operator in charge of transmission, distribution and supply of electricity, for a period of 25 years as from the entry into force of the Electricity law, i.e.23 April 2015 (theoretically until April 2040).

Schedule 1: indicative list of energy projects in Burundi

Name Installed Power Capacity Financing Expected Date for Commissioning
Hydro-Electric Plant Mpanda 10,4 MW Burundian Government 2018
Hydro-Electric Plant Kabu 16 20 MW Credit from the Indian Government 2018
Hydro-Electric Plant Jiji-Mulembwe 49 MW World Bank, AfDB, UE, EIB 2020
Hydro-Electric Plant Rusumo falls (Burundi-Rwanda-Tanzania, 80 MW) 26,6 MW (Burundi Part) World Bank, AfDB 2020
Kagu Project 8 MW PPP Swedenergy 2019
Solar PV Project (two units) 20 MW PPP Gpt Sarako-Tauber 2017
Solar PV Project 7,5 MW PPP Gigawatt Global 2018
Biomass Project 30 MW PPP Global Synergy Solutions Ltd 2017
Importation from Ethiopia 200 MW Burundian Government: MoU signed. 2020
Rehabilitation Hydro-Electric Plant of Ruvyironza 22,5 MW World Bank 2020
Gas-fired Plant 30 MW PPP Interpetrol 2017
Peat Power Project 15 MW PPP with BUCECO 2019
Ruzizi III 70 MW (Burundi Part) World Bank, AfDB, EIB, UE 2020
Solar PV Project 11 MW PPP CRD Holding 2017
Rehabilitation Hydro-Electric Plant in Kirasa-Karonge 27 MW Credit from Chinese Government 2019
For a total installed power capacity of 591 MW.

Footnotes

[1] The Electricity Law dated 23 April 2015 grants to Regideso the monopoly of transmission, distribution and supply of the electricity for 25 years as from the entry into force of the Electricity Law. However, direct selling to private third-party may be authorised under specific conditions, see Section 4 (b).

[2] This trans-border hydropower complex is made up of 2 plants: Ruzizi I (operated by the Congolese utility, SNEL, since 1958), and Ruzizi II (operated by Burundi with the two neighbouring countries which are Rwanda and DRC through a transnational public company SINELAC, for Société Internationale des Pays des Grands Lacs whose shareholders are Democratic Republic of Congo, Rwanda and Burundi, and established in 1983 by a multi-national treaty).

[3] EGL, an entity of the Economic Community of the Great Lakes Countries, gathering Rwanda, DRC and Burundi for energy cooperation.

[4] The results of the precedent tariff increase of 2012 has had positive impacts on the financial situation of Regideso but were not sufficient for improving it on the long-run.

[5] Law No. 1/13 dated 23 April 2015 for the re-organisation of the electricity sector in Burundi.

[6] Law No. 1/14 dated 24 April 2015 for PPP.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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