Burundi Energy Situation

Overview Republic of Burundi     250px-LocationBurundi.svg.png Capital Bujumbura Official language(s) Kirundi, French Government Presidential Republic President Pierre Nkurunziza Total area 27,834 km2 Population 8,988,091 (2009 estimate) 8,038,618 (2008 census) GDP (nominal) $1.321 billion GDP Per capita $162 Currency Burundi franc (FBu) (BIF) Time zone CAT (UTC+2) Calling code +257

Energy situation Burundi is a small, low income, densely-populated, landlocked country. The national income per capita is about $140, one of the lowest in the world. About 90 percent of the population lives in rural areas, although the urban population has grown rapidly in the past decade. According to the African Development Bank, 81 percent of the population was below the international poverty line of US$1 a day in 2006. Most of the rural population depends on subsistence farming and livestock for their livelihood and has only marginal involvement in the monetized economy. It is only in the last three years that private consumption has grown in real terms. Burundi`s energy consumption relies to a great extent on biomass. Households are the main consumers of energy in the country, accounting for 94% of total consumption. Their needs are almost exclusively met by traditional biomass (99%). Electricity (0.3%), and oil products (0.4%) play an insignificant role. If industry and transport is included, 94% of all energy consumption relies on biomass, which is composed by around 70% of fuel wood, 18% of agricultural residues, 6% of charcoal, and 1% of bagasse. A key feature of the power sector in Burundi is the very low level of electrification. Total connections to the REGIDESO network have increased by about 10,000 since 2000 and now stand at about 41,000. Out of these 34,700 connections belong to households. That means that only 2% of the 1.6 million households in the country is currently electrified. Some 27,000 of these are located in Bujumbura, where the electrification rate is approximately 50%. Only 8,000 households (0.5 %) in the rest of the country are electrified. Even in electrified cities the connection rate is generally less than 10%. The average consumption of electricity in Burundi is 23 kWh/cap/year which is one of the lowest in the world (in Germany it was 7,442 kWh in 2004). A key problem of the whole energy sector of Burundi is the scarcity of technical and management skills which affects the prospects for developing the country's energy resources, and it also reduces the scope for effective policy-making and the planning and operations of energy producing, marketing, and consuming institutions. Fuel wood The high population density combined with an inefficient use of biomass (three stone fire cooking) makes fuel wood increasingly scarce and puts reforestation efforts in competition for land with agricultural production. It is estimated that trees cover around 200,000 ha or 7% of the country's total land area. This includes natural forests (around 130,000 ha), woodland savannah and tree plantations. Wood consumption is estimated to be 6.4 Mm³ per year or around 3 kg per day and person. It is significantly more what a sustainable management of the 200,000 ha tree area would allow. Thus, there is clear evidence that the forest area is continuously depleting on a national level although data related to forestry and fuelwood are very poor. A potential partial substitute for firewood could be peat although the resources are limited. Dried peat is either used directly or processed to peat charcoal. Peat reserves are estimated at 100 to 150 million tons, 57 of which are considered economically exploitable. The use of peat was promoted by the Burundian government for quite a long time, because it is – beside fire wood – the only natural energy resource in Burundian soil. It is, however, not very well disseminated in the country and mainly used in government institutions like army camps, prisons, etc. and by a very limited number of private companies like bakeries. The annual production of peat during 2006 was only 4,871 tons, a quantity, which could even not satisfy the demands of the army which is the main peat consumer. However, potentially peat could cover a substantial share of Burundi’s energy demand for several years. Environmental aspects of peat production and consumption need to be considered carefully. Petroleum products The consumption of commercial energy is very low with only 14 kg oil equivalent or 163 kWh per year and capita (2001), one of the lowest in the world. Petroleum products (crude oil, LPG) account for 2,5 % and hydropower for another 2,5% of the energy consumption. All petroleum products (70 – 85 kilotons per year) have to be imported and transported over at least 1,400 km through neighboring countries before they reach Burundi. Consequently, petroleum is comparatively expensive and a high burden on the national budget. The market price for Diesel and Gasoline is around 1.20 US$ per liter. Petroleum products are used for transportation, for industrial purposes and for power generation in diesel run thermal plants. The utility REGIDESO owns a 5.5 MW diesel power plant acquired in 1995, which has been mostly idle due to the lack of funds to pay for the fuel. The average cost of thermal (diesel) electricity is approximately USD 0.33/KWh, while the average sale price was 88.5 BuF/KWh (USD 0.075) in 2007. The thermal plant has been used as back-up in case of hydropower production failure. More recently, and in the face of the increasing supply deficit, the Government has decided to operate the thermal plant as a complement to insufficient hydropower supply, and to assist REGIDESO in meeting the plant’s high operating expenses. Standalone diesel generator sets and inverters are also in use, but are mainly limited to hotels, lodges or public institutions (military camps, hospitals, schools) and rich individual households. Hydropower Hydropower is the most important technology for power generation in Burundi, representing 95% of the total national generation capacity. Most of the electricity supply is generated by seven REGIDESO hydroelectric plants with a combined installed capacity of 30.6 MW. Two plants deliver 85 percent of the National supply: Rwegura (18 MW) and Mugere (8 MW). Burundi also benefits from imports from the regional hydro plants of Rusizi I and II, which are operated by Société Nationale d’Electricité (SNEL), and SINELAC, respectively. Currently, these imports account for 40% of the electricity consumption. DGHER operates 5 (other sources say 8) small and micro hydro plants in rural areas while non-governmental organizations (NGOs) and some nonprofit organizations like churches operate another twelve micro hydro plants. At least 40% of them are out of service or in urgent need for being rehabilitated. Bagasse Up to 10% of Burundi’s electric power is generated from bagasse a by-product of the sugar industry based on co-generation technology. The bagasse is used as feedstock to produce both process heat and electricity. As a result of extensive use of co-generation in Burundi, the country's sugar industry (SOSUMO) is self-sufficient in electricity and can sell excess power to the national grid. Electricity supply Burundi faces severe constraints in electricity supply. The supply deficit currently varies between 12.9 MW during the wet season and 23.5 MW during the dry season when the country’s main hydropower plants are running at reduced capacity. The deficit in the power supply leads to frequent outages (on average 12 days a month). A large percentage of firms in Burundi have their own back-up generator, or share access to one. Back-up generators typically cost US$0.40 to US$0.50 per kWh to run, cutting into business profits and reducing the ability of local business to compete in regional and international markets. The impact of power cuts is considered one of the key hurdles to economic growth. Demand for electricity is expected to continue to rise steadily as the economy improves, returning refugees re-establish themselves and standards of living increase. Peak demand occurs during the evening hours and emanates mainly from household lighting needs. Due to the lack of maintenance and the supply deficit described above, the quality of service and operations is currently insufficient, with estimated technical and non technical losses of 20-30 %. Technical losses are deemed to make up a large portion of these losses given the poor condition of the network, of the high voltage and medium voltage stations, and of the low voltage distribution posts. The numbers of power interruptions are high both on Low Voltage and on the High Voltage/Medium Voltage (HV/MV) backbone network. The quality of the electricity delivered suffers from poor frequency and significant voltage deviations The Lack of adequate system earthing and protection functions cause occasional high voltage surges the result of which is that consumer equipment and appliances are destroyed. Policy framework, laws and regulations The 2006 Poverty Reduction Strategy Paper (PRSP) presents four strategic axes: (i) improve governance and security; (ii) promote sustainable and equitable economic growth; (iii) develop human capital; and (iv) prevent and control HIV/AIDS. Energy issues are mentioned under ii), in the paragraph “Expand power supply capacity”. Energy Policy The country has substantial potential for hydroelectric power and the government plans for expansion base mainly on hydropower. Thermal power production is considered a temporary measure to bridge the short term gap between demand and supply. The focus of the energy policy is on rehabilitation of existing (hydropower)plants and distribution grids as well as the development of new hydroelectric sites. Furthermore a rural electrification program is planned mainly by grid extension and by providing information on alternative energy sources affordable for low-income households. For the forthcoming years, the Government of Burundi is planning to carry out the following actions in the energy sector: (i) double the hydroelectric power stations of Nyemanga (2.8 MW) and Buhiga; (ii) execute feasibility and implementation studies for Kabu 16 (max. capacity: 20 MW), Kaganuzi (5 MW), Mpanda (10.4 MW), Mule 34 (16.5 MW). For the longer term feasibility and implementation studies for Makembwe (115 MW), Kabulantwe (67 MW) Rushihi (15 MW) and Ruzibazi (7 MW) are foreseen; (iii) construct regional power plants in cooperation with neighbouring countries: Ruzizi III (145 MW) and Rusumo Falls (61.5 MW); (iv) develop rural electrification by the construction of mini-hydros, solar and wind- power, the use of biogas and grid extension; (v) renovation of the existing hydroelectric power stations, and electricity transmission and distribution networks; (vi) construction of Power generation plant of Kabu16, Kaganuzi, Mpanda and Mule 34; (vii) extension of the urban electric networks as well as those in rural areas; (viii) rehabilitating of existing non functioning plants; (ix) organizational audit and financial turnaround of the Electricity Utility (REGIDESO); (x) develop a performance contract between the Government and REGIDESO. Realisation of all the above would effectively lead to a multiplication of the existing electrical infrastructure, which requires a strong sector to absorb this growth. In the light of the existing scarcity of qualified human capacity it thus is questionable if execution of the above activities is realistic. Moreover, to be able to realize the plans, at least 80% of the funds would have to come from inter¬national donors, which in itself bears a risk of not getting materialized. In addition, the Ministry of Water, Energy and Mines (MWEM) aims to (i) restructure the energy sector by merging the electricity activities of DGHER with REGIDESO; (ii) encourage private sector participation in electricity production; (iii) fully enact the regulatory framework. The MWEM considers the direct subsidy of operation and maintenance (O&M) costs as inadequate and inefficient and adheres to a tariff policy of fully covering at least O&M costs; (iv) making users and public services aware of rational utilization of available energy. In 2000 the government adopted the Law N° 1/014, which defines the principles, forms and conditions for private enterprise intervention in the electricity sector. According to the law, the energy sector remains a public service under the responsibility of the state, but it opens its doors to Burundian public and private investors, selected through invitation to tender with specific criteria, The Government invited the private sector to play a progressively important role in the management of the utility, first through a management contract and later transitioning to a concession. However, the present situation is much alike to that prevailing before the law, i.e. the public electrical utility is still entrusted to the state controlled companies REGIDESO and DGHER. Tarification Electricity prices in Burundi are fixed by the government and not market driven, insofar part of the energy policy. Tariffs are in general too low to allow financial viability, and social equity among service users. A tariff revision in 2007 was a first step to adjust the tariff structure and its levels, but they are still inadequate. The household electricity tariffs of REGIDESO currently in place include subsidized pricing for up to 750 kWh per 2–month billing cycle, starting at 41 BuF/kWh (0.02 Euro/kWh) for the first 150 units and going up to 127 BuF/kWh (0.07Euro/kWh) for consumption over 750 kWh. With the assistance of the World Bank, a tariff study is planned in the coming month to provide the theoretical basis for the difficult political decision of increasing the tariffs. DGHER tariffs are low as well. Starting at 56 BuF/kWh (0.03Euro/kWh) up to 300kWh and 72 BuF/kWh (0.04Euro/kWh) for more than 750 kWh. Sustainable structures for rural electrification require cost covering tariffs as a key factor. Hence, it will be necessary for EnDev to support the process of creating the framework conditions for tariff setting to enable electricity production of power producers to be cost covering and profitable. Institutional set up in the energy sector, activities of other donors The institutional framework in Burundi is complicated by the fact that multiple ministries and agencies have overlapping responsibilities for the energy sector. Four ministries (Energy and Mines; Communal Development; Planning and Finance) play an active role in defining and executing government policy in the energy sector. The Ministry of Water, Energy and Mining (MWEM) has the overall responsibility for the energy sector. The policies and programs of the ministry are implemented through the Directorate General of Water and Energy (DGEE) and the Directorate General of Hydraulics and Rural Electrification (DGHER). DGEE is responsible for preparing sector policy and legislative and regulatory texts. It plans and coordinates the sector’s activities, defines priorities, formulates investment programs, controls operation of the power utility, oversees the permanent secretariat of the national energy commission, and prepares tariff policy. DGHER is responsible for coordinating all activities for water supply and energy in rural areas, including (i) managing government budgets and programs for rural electrification; (ii) selling electricity produced from rural facilities or purchased from REGIDESO; (iii) providing services to third parties for project development; (iv) managing all authorized grants from donors. MWEM also supervises REGIDESO (the utility for Water and Electricity Production and Distribution), a state enterprise created in 1968. REGIDESO is responsible for managing the national electricity grid and for ensuring the supply of electricity and water in Bujumbura as well as in 23 urban centers. Currently, all electricity production facilities over 150 kW are managed by REGIDESO. However, REGIDESO is not responsible for planning the expansion of the electricity supply system, which is done by the DGEE as one of their main activities. There are plans to merge REGIDESO and DGHER to one utility providing energy and water nationwide. Another supplier of electricity is SINELAC (Société Internationale des Pays des Grands Lacs). SINELAC was established as a joint venture by Burundi, Rwanda and the Democratic Republic of Congo to develop and operate international electricity projects and supplies electricity to REGIDESO. The CNEE (National Water and Energy Commission) was created in 1989 to: (i) coordinate the activities of the various executing agencies and participating institutions in the water and energy sectors; (ii) propose legislation to promote water resources; (iii) establish standards and norms; ensure the protection of water and energy resources; In addition to the above mentioned institutions the Government is planning to create a Control and Regulatory Authority for the Water and Electricity Sector being responsible for concession agreements, standards and norms and record and publish approved tariffs for electricity services. Up to now all regulatory decision are made by the Ministry itself. ONATOUR (National Agency of Peat) is another public company with the government holding 100% of the shares. Its assignment is the exploitation of peat in Burundi. The Burundian Centre for Alternative Energies (Centre d'Etudes Burundais en Energies Alternatives - CEBEA) was created with its general mission of applied research in renewable energy. Originally its main task focused on wind energy. In the late 80ies, CEBEA installed many imported photovoltaic modules on health centres and schools and had a production schedule of the solar equipment for cooking (solar cookers), for heating (solar heaters) and for drying. CEBEA suffered from a drastically reduced staff number and hardly any operational budget. Other donors: Main donors in the energy sector in Burundi are the World Bank, the African Development Bank, the Chinese Exim Bank, UNDP/GEF, since recently the german KfW, EU and France and to a small extent Japan. In 2008 the World Bank approved the MULTI-SECTORAL WATER AND ELELCTRICITY INFRASTRUCTURE PROJECT. The budget of the project is US$ 65 Mio and fully granted. The amount for the energy component is US$ 45 Mio. The project development objective is to increase reliability and quality of electricity services and to strengthen REGIDESO’s financial sustainability. The project is intended to help REGIDESO to restore its financial and commercial viability and the quality and continuity of services in the face of the increasing demand from individual consumers and economic agents. The investments are geared towards the rehabilitation of the main grid infrastructure back-bone (US$ 16,8 Mio), financial support to procure diesel fuel for 3 years and associated parts to allow current thermal generation capacity to be fully used (7,9 Mio), pre-feasibility and feasibility studies of 8 small sized hydropower plants (US$ 1.5 Mio), increased revenue collection of REGIDESO including the installation of 5000 prepaid meters (US$ 2.3 Mio) and demand side management measures (US$ 1 Mio) including the distribution of 200.000 CFLs and energy audits. The 3rd phase of at Ruzizi for SINELAC, the Ruzizi III Hydro Power station will be finance by Germany (KfW), EU and France. AfDB has approved a US$ 10,8 Mio project that focuses on investments for the rehabilitation of hydropower generators, the construction of two new Medium Voltage / Low Voltage (MV/LV) transformer plants in Bujumbura, the rehabilitation and extension of the MV/LV electricity networks, and establishment of new connections and installation of new meters. In addition AfDB worked out an infrastructure action plan for Burundi covering the next 20 years. The core of the Action plan is a comprehensive and ambitious program that aims to upgrade the basic infrastructure of the country and integrate Burundi's power, transport and communications networks with those of other members of the EAC. The key feature of the program is to develop a national power grid that, by 2030, will provide 24 hour electricity to more than 40 percent of the 2.8 million households in the country at that time. It will also provide reliable and low-cost power to all urban-based businesses and for processing and other requirements in the key farming locations The total cost of the program over the next 20years is put at about $4.6 billion (at 2007 constant prices). The power program would involve expenditures of about $2 billion, including $465 million of private investment in new generation capacity. The program aims at installing additional production capacity of 395MW. The Chinese cooperation financed the rehabilitation of the hydroelectric power plants of Mugere (8 MW) in 2007, and the rehabilitation of Ruvyironza (1.28 MW) and Gikonge (0.85 MW) in 2005, for which works have been completed by Chinese companies. UNDP-GEF is financing a regional Micro and Mini-hydropower Capacity Development Project, which includes Burundi among 11 benefitting countries. Japan financed the installation of a 200 kW solar power system for the university hospital of Kamenge. The regional project Catalyst/IFDC has a component for “production of sustainable energy” combined with reforestation and agro forestry activities (energy carbon and biomass with new techniques of carbonization). The Arabian Economic Development Bank is actually financing a feasibility study for the electrification of rural areas in Burundi (US$ 440.000). The Belgian Technical Cooperation is supporting REGIDESO. Other major activities in the country financed by BMZ or DGIS