Thursday, 24 October 2013

Why EWSA was split

1382649560n11For the second time in five years, the Cabinet has approved the split of Energy Water and Sanitation Authority (EWSA) into two companies to manage energy and water resources independent of each other.

The first body – the Energy Holding Company – will manage energy development and electricity distribution, while the Water and Sanitation Company will manage water resources and distribution both in the rural and urban areas.

The move is aimed at removing inefficiencies, according to Prof. Silas Lwakabamba, the Minister for Infrastructure.

“It was clear that EWSA needed reform. There was no proper planning. Combining together water and energy management left EWSA without a clear focus,” Lwakabamba said at a media briefing yesterday.

“So we thought that we needed to plan properly through developing a low cost energy development strategy of up to 20 years, looking at how many resources we have and how we can exploit them cheaply but efficiently,” he explained.

Lwakabamba added that the new companies will immediately take over EWSA responsibilities and operations.

“There was a lot of cross subsidisation. As a matter of fact, electricity was subsidising water and eventually the government had to subsidise the whole of EWSA for it to survive,” he said.

“The preferred option by government and its partners is to have two independent companies with different boards to manage these resources separately.”

The change follows a five month review of the EWSA’s efficiencies in service provision. It was triggered by a review of Economic Development and Poverty Reduction Strategy (EDPRS2) in March this year, where government and its donors agreed that a change is required to meet the twin challenge of investing in complex water and electricity networks.

The Director General of EWSA, Ntare Karitanyi, welcomed the move saying it will help the country meet its water and electricity distribution targets.

“We have very many projects in methane, peat, hydropower and water supply. These new bodies are a natural evolution that will help to give better service and also attract more investments,” Karitanyi said.

Karitanyi still holds the position of EWSA director general until Cabinet appoints heads of the new entities.

The development comes after government’s long journey in pursuit of better management of the country’s water and energy resources.

In 1999, a law was passed removing the monopoly of then Electrogaz in managing electricity and water supply, which slowly encouraged independent power operators.

Electrogaz was, later in 2003,  placed under a contract with a German company, Lahmayer International, to manage and restructure the body for five years.

More for investment 

The contract was, however, terminated only after two years, and, in March 2006, Electrogaz slipped back into the hands of government.

In 2008, Electrogaz  was split into two corporations; Rwanda Electricity Corporation, and Rwanda Water and Sanitation Corporation.

This was, however, not to last and in 2010, the two were then  merged again into the Energy Water and Sanitation Authority.

The latest split will see the two companies have units dedicated to managing the respective resources, as well as seeking delivery of large investments like the on-going exploration of geothermal potential in the northwest.

Information from the Ministry of Infrastructure indicates that the country needs investments worth about US$3 billion to increase access to water from the current 74 per cent to 100 per cent and access to electricity from 17 per cent to 70 percent by 2018.

Electricity production stands at 110 megawatts, while government’s ambition is to multiply it to 563 megawatts by 2018.


Why EWSA was split


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